IPQ - Supply Chain Negotiations SCM340

Part 1

Introduction to Negotiations

Your company manufactures DELAMIX blenders, and you are negotiating terms with a supplier of a critical component in your manufacturing process (XYZ Plastics). The chief operating officer (COO) wants you to lead the contract negotiations with XYZ Plastics; however, your planning team has no formal training in negotiation strategy planning. To assist you, the COO provided a recommended template to guide your planning effort. He asked that you review the template and prepare a discussion or narrative for each section that will outline the key components required and guide the planning process.

After reviewing the template, you decide to host a series of training sessions (one per week) designed to coach your team on the negotiation strategy planning process. Your first planning session will serve as an introduction to the planning process and outline the purpose of negotiations and the intended outcomes.Use the template provided (Negotiation Strategy Planning Template).

Purpose of the Negotiation (300–400 words)
- Characteristics of negotiations (why negotiate)
  - Discuss the purpose of negotiations in the supply chain.
  - Discuss at least 2 situations where negotiation is appropriate.
  - Discuss at least 2 common negotiation situations.
Desired outcome (300–400 words)
- Discuss the desired outcomes of your organization.
  - Discuss the importance of identifying the organization’s goals and objectives as a part of negotiation planning.
  - Define and describe the term most desirable outcome (MDO).

Key Negotiation Strategies

Pertinent information (400–600 words) (Probable negotiation tactics, nature of current relationships)
- Relationships and interdependence
  - Discuss the importance of relationships in negotiations.
  - Describe at least 2 tactics for managing conflict in negotiations.
Interests, desires, and motivations (400–600 words)
- Strategy and tactics
  - Compare and contrast distributive and integrative negotiations.
  - Based on your research, discuss at least 2 integrative negotiation skills or tactics.

Cost Analysis and Ethical Considerations

Sources of power (400–600 words) (What leverage or power can people apply to achieve their goals?)
- Power and influence
  - Define power and influence in the negotiation process.
  - Describe at least 2 sources of power and influence in negotiations.
Walk-away alternative (400–600 words)
- Best alternative to negotiated agreement (BATNA)
  - Discuss options and alternatives to agreements.
  - Discuss 2–3 tough or hardball negotiation tactics.

Negotiation Preparation

Ethical considerations (200–300 words)
- Ethics in the negotiation process
  - Define and describe ethics and ethical reasoning.
  - Discuss 2–3 deceptive tactics in negotiation.
Negotiation team (200–300 words)
- Roles, responsibilities, and composition
  - Discuss the role of the negotiation team.
  - Discuss the pros and cons of negotiation teams.
Recommended negotiation strategy (100–200 words)
- Based on your research during Week 2 and your instructor feedback, identify your preferred negotiation strategy.
- Identify 3–4 best practices in negotiations that may assist you in achieving your goals.

Part 2 Power Point

The chief operations officer (COO) reviewed your negotiation strategy planning template and decided that you and your team are ready to brief the chief executive officer (CEO). He would like you to review the negotiation scenario with your team and prepare a PowerPoint presentation to the CEO for final approval.

Negotiation Scenario

Introduction

This scenario provides the background and essential information elements for a contract negotiation between ABC Manufacturing Company and XYZ Plastics. This scenario is designed to stimulate a discussion of the negotiation process, contract pricing, negotiation strategy, techniques, and ethics.

Scenario Description

Overview

You will assume the role of the regional manager for ABC Manufacturing Company. Your company manufactures DELAMIX blenders, and you are negotiating terms with a supplier of a critical component in your manufacturing process (XYZ Plastics). You receive 1,300 units monthly at a delivered cost of $2.50 per unit. You project needing 1,900 units for the next 6–12 months and perhaps as many as 2,000 units ongoing after that. You have been satisfied with the supplier’s quality; however, late deliveries have forced you to schedule overtime to meet customer orders. An out-of-state vendor (QMP Imports) has offered you a 10% discount for the 2,000 units per month for a one-year contract. Your boss has authorized a contract negotiation team of 2–3 members. The COO would like to reduce the overall contract price by 10–15%. The CEO negotiated the initial contract with XYZ Plastics when he started the company and would like to continue working with the company because of demonstrated quality, responsiveness, and loyalty.

Background

The COO of ABC Manufacturing and the senior vice president of XYZ Plastics have been meeting and talking frequently regarding the vendor contract renegotiation. XYZ Plastics is an industry leader and has been the primary vendor to ABC Manufacturing for 42 years. XYZ Plastics contracted a new raw materials provider to reduce material shortages. XYZ Plastics is aware that its past delivery issues are a major discussion point, and it is prepared to offer a reduction in unit price (to be negotiated) along with a guarantee of on-time delivery before or on the required delivery date. Currently, XYZ is the only company in the United States that manufactures this part. ABC Manufacturing Company would like to continue to claim “made in the U.S.” in its advertising.

XYZ Plastics is aware that ABC Manufacturing Company will require additional units in the out-years and would like to secure the contract for continued growth. A new member of the ABC Manufacturing Company team has a contact in XYZ Plastics that offered to provide information on the manufacturing cost and profit per unit and other confidential proprietary information in exchange for a finder’s fee.

Task Description

In the previous Units, you worked on developing a Negotiation Strategy Planning Template. Now, you will use this template to prepare a presentation based on the scenario described above. Your presentation should follow the format of the Negotiation Strategy Planning Template. You will review the negotiation scenario and develop each section based on the information provided. This will be your final Key Assignment Negotiation Strategy Presentation for the CEO. The final presentation will consist of 12–15 PowerPoint slides with 100–200 words of speaker notes per slide. The presentation should have the following sections: