In this world of not having enough time and resources to get things done, we can't afford not to become proficient in areas that make the most impact. One of the most important, and most impactful, skill sets for the supply chain is negotiation skills and behaviors.
To become an effective negotiator, it takes more than just honing your skills. You need to learn how to establish a plan that can be applied to all your supply and demand chain processes when sourcing, selling or operating your company. Then you need to communicate the results to employees, shareholders, customers and vendors.
Return on Investment — and Expectations
When you allocate resources for a negotiations course, don't forget about return on investment (ROI). Take the dollars you invest and any fully loaded costs and measure the delta from deals your teams close with vendors, customers or internal parties. Compare your benchmark of what you expected to what you actually received. Divide this into your investment and you have a simple ROI that provides a good measurement but doesn't require much time to determine.
But what about return on expectations (ROE)? Jim Kirkpatrick, renowned expert on justifying resources dedicated to training, talks about a measurement that impacts the business in a qualitative way. He says that before training, we need to measure expectations of how people will behave after they're trained. For example, if we put in place a process for preparation of negotiation, we should develop a preparation document to identify certain outcomes that we expect in the major deals with vendors. If people use this document, it is an observable behavior. If we expect them to use it in every engagement, then we can measure their actions against those expectations. The ROE (use of the process document) will drive behaviors that impact the way we get to our ROI(more sound outcomes by using the planning document). Sometimes we forget that we're dealing with human beings and need to measure behavior, not just dollar outcomes.