News

Vantage Releases New Global Research on Customer-Supplier Negotiations

FOR IMMEDIATE RELEASE

Contact Information:

Christine Batterson
+1 617 354 6090 x212
cbatterson@vantagepartners.com

BOSTON – 19 June, 2009 – Vantage Partners announced today the release of new research on negotiation practices – the 2009 Customer-Supplier Negotiation Study.

The research – conducted in partnership with the Institute for Supply Management (ISM), the International Association of Contract and Commercial Management (IACCM), The Conference Board, and Sales and Marketing Executives International (SMEI) – includes both buy-side and sell-side quantitative data, statistical analysis, and qualitative data gathered from more than 600 companies globally.

Key findings include:

• A significant portion (on average, 45%) of the value expected to result from strategic sourcing efforts is not realized.
• Buy-side respondents report realizing only 54% of potential contract value from suppliers during implementation; while sell-side respondents grades themselves somewhat less harshly, on average, they report delivering only 66% of the potential value in their customer contracts.
• Companies that use a more collaborative (versus adversarial) negotiation approach realize greater value from their contracts (with both customers and suppliers).
• More than 75% of all buy-side and sell-side respondents believe the other side has more leverage in the negotiation than they do.
• More than 50% of buy-side respondents believe that the following are significant or very significant barriers to realizing greater value from sourcing contracts: end users / technical staff working around the procurement process, lack of preparation by those involved in negotiations, and lack of stakeholder alignment.
• Organizations with a formal negotiation process report superior results compared to those without; buy-side participants with a formal negotiation process report achieving 27% more of the value they target through strategic sourcing efforts.
• Buy-side respondents that reported having both a formal category management process and a formal SRM program were 8 times more likely to be in the top 25% of buy-side respondents (versus the bottom 25%) in percentage of contract value actually realized during implementation.
• Organizations that systematically develop negotiation strategies that are aligned with their category management and supplier relationship management strategies report realizing 59% more value from their supplier contracts than organizations that do not formally define negotiation strategies.

To access a copy of the full study, click here.

"Many negotiators recognize that better results could be achieved from improved negotiation approaches,” says Tim Cummins, President and CEO of IACCM.  “However, companies struggle to change behaviors, both internal and external.  This study points to the potential for most organizations to capture substantial increased value from their business relationships - if they invest in understanding and enabling more systematic and collaborative approaches."

About Vantage Partners
Vantage Partners is a management consulting firm that specializes in helping companies achieve breakthrough business results by transforming the way they negotiate with, and manage relationships with, key business partners. A spin-off of the Harvard Negotiation Project, the partners and staff at Vantage have authored numerous books and articles in leading journals like the Harvard Business Review on commercial negotiations, supply chain collaboration, and strategic alliances.