B
Best Alternative to a Negotiated Agreement (BATNA)
Best Alternative to a Negotiated Agreement (BATNA) is a term used in negotiation theory to describe a party's course of action if a negotiation fails to produce an agreement. In other words, BATNA is the next best option available to a party if a negotiation does not result in a satisfactory outcome.
BATNA is important in negotiations because it provides a standard against which the proposed agreement can be evaluated. If the proposed agreement is better than a party's BATNA, it may be in that party's interest to accept it. If the proposed agreement is worse than a party's BATNA, then it may be in that party's interest to reject the agreement and pursue their BATNA instead.
A strong BATNA is considered an important negotiation skill, as it gives a party more leverage in negotiations and improves their chances of achieving a favorable outcome. Therefore, it is recommended that parties identify and evaluate their BATNAs before entering into a negotiation.
Specialism:
Negotiation
Sourcing
Supplier Management
Learn moreBest and Final Offer (BAFO)
The BAFO is normally the final step of most negotiations. It represents the final position of either the Supplier or Buyer. If that offer is not accepted the negotiations are concluded and potential other options are considered.
D
Dispute resolution in procurement refers to the process of resolving disputes or conflicts that arise between a company and its suppliers. The disputes can arise from a variety of issues, such as pricing disagreements, delivery delays, quality issues, and contract disputes.
Specialism:
Contract Management
Negotiation
Supplier Management
L
Least Acceptable Agreement (LAA)
The Least Acceptable Agreement (LAA) is the minimum level of agreement or outcome that a party is willing to accept in a negotiation. It is the point beyond which a party would prefer to walk away from the negotiation rather than accept the proposed agreement. The LAA is an important concept in negotiation because it sets a clear boundary beyond which a party will not compromise or make further concessions.
Determining the LAA is a crucial aspect of negotiation preparation, as it helps the party to define their priorities, objectives, and limits. The LAA serves as a reference point during the negotiation, helping the party to assess the value of different proposals and offers and to decide when to walk away from the negotiation if necessary. It is important to note that the LAA may differ from one negotiation to another, depending on the specific circumstances, interests, and goals of the party involved.
Specialism:
Negotiation
Sourcing
Supplier Management
M
Most Desired Outcome (MDO)
In the context of a negotiation, the Most Desired Outcome (MDO) refers to the ideal or optimal result that a party hopes to achieve. It is the best possible outcome that the party can envision and is often used as a benchmark against which other potential outcomes are measured. The MDO is generally kept in mind by the negotiating party throughout the negotiation process and is used to guide the party's strategy and decision-making.
Identifying the MDO is important as it helps clarify the negotiating party's priorities and goals and provides a clear understanding of what is at stake in the negotiation. Once the MDO is established, the negotiating party can use it as a reference point to assess the viability of potential agreements, concessions, or compromises. Ultimately, the goal of a negotiation is to secure an outcome that is as close as possible to the MDO while also considering the other party's interests and objectives.
Specialism:
Negotiation
Sourcing
Supplier Management
N
Negotiation is a communication process in which two or more parties engage in discussions to reach an agreement or resolve a conflict. It involves the exchange of proposals and counterproposals, with each party seeking to protect their interests while finding common ground.Negotiation is a key skill in many business contexts, including procurement, sales, and contract management. Effective negotiators are able to understand the needs and perspectives of all parties involved and find creative solutions that satisfy everyone's interests.
Specialism:
Negotiation
Sourcing
Supplier Management
S
Sourcing is the process of finding and contracting with Suppliers for goods and services. A highly simple principle but very complex to deliver in practice. There are a number of steps within the sourcing process and Organizations should fit the sourcing process to their wider business processes.
Specialism:
Negotiation
Procurement Process
Sourcing
Supplier Consolidation is a procurement strategy that can be used to simplify an organizations supplier base that can reduce the supply chain risk exposure of an organization whilst improving the ability to reduce the costs of a particular good or service. For example, reducing 10 suppliers providing the same or similar services into 2 suppliers can reduce the risk and increase the economies of scale to reduce the overall service cost.
Specialism:
Category Management
Negotiation
Risk Management
Sourcing
Supplier Management
Supplier Indexing sometimes referred to as the Dutch Windmill is a method of analyzing buyer-seller interdependence by combining the buyer's purchasing perspective of the supplier and the supplier’s perspective of the buyer. The method results in 16 different business-to-business relationships, each detailing different supplier and sourcing strategies.
Specialism:
Category Management
Negotiation
Risk Management
Sourcing
Supplier Management
Learn moreSupplier Segmentation, or Supplier Positioning, refers to the process of classifying suppliers in terms of their importance to the organization. It is an integral part of a Supplier Management program that helps define the resources, processes and procedures that are applied to a supplier relationship.
Specialism:
Negotiation
Risk Management
Sourcing
Supplier Management
Learn more
