prof douglas boateng (msc, engd, fcilt, fiod, fcmi, fic, fiom, fcips, finst.d ) professor...

P R O F D O U G L A S B O A T E N G

(MSc, EngD, FCILT, FIoD, FCMI, FIC, FIOM, FCIPS, Finst.D)

Professor Extraordinaire - Supply and Value Chain Management.

IOM Extraordinary Chair in Operations and Supply Chain Management Professional Development

E X E C U T I V E I N S I G H T S S E R I E S

2 0 1 5 P A N A F R I C A N S U P P L Y C H A I N

M A N A G E M E N T P U B L I C L E C T U R E S

“ W E R E W E E V E R O N T H E S A M E PA G E ? ”

N E G O T I AT E , A G R E E O N S P E C I F I C I T I E S A N D C O N T R A C T

A S S O C I A T E S & P A R T N E R S F O R T H E Q U A S I A C A D E M I C A N D I N D U S T R I A L S O C I A L L Y R E S P O N S I B L E I N I T I A T I V E

P A S T & P R E S E N T

D I S C L A I M E R

CAUTIONARY NOTICE REGARDING CONTENTS, FORWARD-LOOKING STATEMENTS, AND DISCLAIMER

+ The information contained in this presentation has been prepared purely as guide for educational

and information sharing purposes.

+ It aims to provide insights using excerpts and case examples from various sources. It cannot be

replicated or sold without the expressed permission of the presenter.

+ The contents, plus any presentations made to date are subject to updating, completion, revision,

further verification, and amendment without notice.

+ Interpretation and generalisation of this purposive research must take into account the population

sample used in the study.

+ To the best of the presenter’s knowledge and belief, the information contained in this

presentation is in accordance with the facts of the research, and does not omit anything likely to

affect the import of such information.

+ All rights reserved. Copyright.

1. Recap on a six (6) year purposive research project, focused on:

Director Level Perceptivities on Aspects of Supply Chain Management.

2. Briefly introduce the concept of negotiations• Summarily highlight emerging paradigms on

o Negotiations, o Agreements, ando Contracts.

3. Discuss the purposive research findings on Director Level

Perceptivities on Negotiations, Agreements

and Contracts.

4. Identify actions required.

5. What next?

P R E S E N T A T I O N O B J E C T I V E S

QUASI INDUSTRIAL AND ACADEMIC RESEARCH OBJECTIVES

Research theme: Gauging Director level perceptivities on aspects of Supply Chain Management

1. 2009-2010 - EXCERPTS FROM PURPOSIVE RESEARCH PUBLISHED

PAN AFRICAN OPEN PUBLIC LECTURE THEME: PROCUREMENT IMAGE CHALLENGES

o How SCM, logistics, and procurement are viewed by industry and government. o Aspects of findings presented at the Smart Procurement conference and at various universities.o Industry executives at various local and international forums.

2. 2010-2011 - EXCERPTS FROM PURPOSIVE RESEARCH PUBLISHED

PAN AFRICAN OPEN PUBLIC LECTURE THEME:

WHO IS TO BLAME FOR THIS?

o Follow up on previous research to examine patterns. o In partnership with CIPS, findings were presented at

various local and international forums and open lectures.

* * I N I T I A L R E S E A R C H W O R K C O M M E N C E D I N 2 0 08

R E C A P : 2 0 0 9 - 2 0 1 1 G A U G I N G D I R E C T O R L E V E L P E R C E P T I V I T I E S

PROCUREMENT IMAGE PROBLEM


RESEARCH THEME:

GAUGING DIRECTOR LEVEL PERCEPTIVITIES ON ASPECTS OF SUPPLY CHAIN MANAGEMENT

2013-2014 - EXCERPTS FROM PURPOSIVE RESEARCH PUBLISHED


FROM THE BACKROOM TO THE BOARDROOM: THE RISE OF THE CHIEF SUPPLY CHAIN OFFICER

o Follow up on previous research to examine patterns. o Findings presented at the Smart Procurement conference. o Industry executives at various local and international forums.o In partnership with CIPS, findings were presented at various local

and international forums. o Excerpts of findings published by CIPS and

Smart Procurement Review.

* * I N I T I A L R E S E A R C H W O R K C O M M E N C E D I N 2 0 08

R E C A P : 2 0 1 3 - 2 0 1 4 G A U G I N G D I R E C T O R L E V E L P E R C E P T I V I T I E S

PROCUREMENT VERSUS SUPPLY CHAIN MANAGEMENT


RESEARCH THEME:

GAUGING DIRECTOR LEVEL PERCEPTIVITIES ON ASPECTS OF SUPPLY CHAIN MANAGEMENT

2015 EXCERPTS FROM PURPOSIVE RESEARCH PUBLISHED


“WERE WE EVER ON THE SAME PAGE? NEGOTIATE, AGREE ON SPECIFICITIES AND THEN CONTRACT”

o Terminological confusion between bargaining and negotiations. o Businesses, especially in the emerging world, were more concerned with short term price reductions,

as opposed to what is in the best interest of the business and industry.o Negotiation is underestimated in the emerging world.o Win-win negotiations, agreements, and resulting contracts do not necessarily mean equality of resulting

rewards and benefits.

Purposive action research to date has been fully funded by PanAvest and Prof Boateng.

Presentation is based on surveys with “purposively” selected “organisations”!**

Initial Findings on Negotiations presented in Ghana in 2013

2 0 1 5 : G A U G I N G D I R E C T O R L E V E L P E R C E P T I V I T I E S

NEGOTIATIONS

2009 2011 2013 AverageSample size 60 65 67 64Responses 47 53 50 50Non response 13 12 17 14Response rate 78.3% 81.5% 74.6% 78.2%

local Continental European Americas

2009 0.234042553191489 0.382978723404255 0.212765957446809 0.170212765957447

2011 0.245283018867925 0.39622641509434 0.169811320754717 0.188679245283019

2013 0.26 0.38 0.2 0.16

2.5%7.5%

12.5%17.5%22.5%27.5%32.5%37.5%42.5%

G E O G R A P H I C A L S P R E A D

% S

PR

EA

D

REVENUES OF ORGANISATIONS RANGED BETWEEN $20M AND $400 BILLION USD**. PARTICIPATING ORGANISATIONS IN ACTION AND PURPOSIVE RESEARCH INCLUDED FORTUNE 1000 COMPANIES, FTSE 250, JSE 100 COMPANIES, STATE OWNED ENTITIES, GOVERNMENT DEPARTMENTS, ETC.

* * 2 0 1 2 - 20 1 3 F O R T H E P U R P O S E S O F T H I S P R E S E N TAT I O N O R G A N I S AT I O N S F R O M I N D I A

J A PA N , A U S T R A L I A , C H I N A , A N D K O R E A W E R E M A I N LY I N C L U D E D I N E U R O P E ; B R A Z I L A N D C A N A D A I N T H E A M E R I C A S ; M I D D L E E A S T I N C O N T I N E N TA L

P O P U L A T I O N

SAMPLE PROFILE

Manufacturing /Production

Mining and Re-sources

Services Food and Bever-age

Government and SOC/SOE

Agriculture pro-cessing

Logistics and Supply chain management

2009 0.191489361702128

0.0851063829787234

0.148936170212766

0.0851063829787234

0.25531914893617

0.0638297872340425

0.170212765957447

2011 0.207547169811321

0.0943396226415094

0.169811320754717

0.0943396226415094

0.245283018867925

0.0566037735849057

0.132075471698113

2013 0.22 0.1 0.12 0.1 0.22 0.08 0.16

2.5%

7.5%

12.5%

17.5%

22.5%

27.5%

S E C T O R S

% S

PR

EA

D

GOVERNMENT AND STATE OWNED ENTITIES FOLLOWED BY MANUFACTURING AND PRODUCTION HAVE THE LARGEST ORGANISATIONAL REPRESENTATIONS.

I N D U S T R I E S

VERTICALS AND SECTORS

Manufacturing / ProductionChemicalOilPharmaceuticalsOther

ServicesConsultingFinancial servicesHealthcareEducationICT

Logistics and Supply Chain Management

3PL4PL5PL7PL

PARTICIPATING ORGANISATIONS IN ACTION AND PURPOSIVE RESEARCH INCLUDED FORTUNE 1000* , FTSE 250*, JSE 100* COMPANIES, LOCAL AND CONTINENTAL GOVERNMENT DEPARTMENTS,

STATE OWNED ENTITIES, ETC.

* 2 01 2 - 2 0 13

S E C T O R S

INDUSTRIAL SUB VERTICALS

S E C T O R S

CEO/ Chief Directors CFO/ Finance Director COO/ Operations Director OTHER

2009 0.106382978723404 0.297872340425532 0.148936170212766 0.446808510638298

2011 0.0754716981132076 0.207547169811321 0.0754716981132076 0.641509433962264

2013 0.08 0.16 0.06 0.7

5.0%

15.0%

25.0%

35.0%

45.0%

55.0%

65.0%

75.0%

% S

PR

EA

D

R E S P O N D E N T

PROFILES

Technical/ Engineering

Director

Commercial/Marketing Director

Chief Legal officer

Chief Supply chain officer

Customer service di-

rector

Chief Mar-keting Offi-

cer

Project Management

Director

Logistics Di-rector

Chief Pro-curement Officer*

Manufactur-ing Director

Chief Strat-egy officer

Chief Infor-mation offi-

cer

2009 0.0476190476190476

0.0476190476190476

0.0476190476190476

0.0952380952380952

0.0952380952380952

0.0952380952380952

0.0952380952380952

0.0952380952380952

0.142857142857143

0.0952380952380952

0.0952380952380952

0.0476190476190476

2011 0.0588235294117647

0.0588235294117647

0.0588235294117647

0.117647058823529

0.0882352941176471

0.0882352941176471

0.0882352941176471

0.0882352941176471

0.147058823529412

0.0882352941176471

0.0588235294117647

0.0588235294117647

2013 0.0285714285714286

0.0571428571428571

0.0571428571428571

0.142857142857143

0.0857142857142857

0.0571428571428571

0.0857142857142857

0.0571428571428571

0.171428571428571

0.0857142857142857

0.0857142857142857

0.0857142857142857

1.0%

3.0%

5.0%

7.0%

9.0%

11.0%

13.0%

15.0%

17.0%

% S

PR

EA

D

R E S P O N D E N T

PROFILES CONT.

2009 2009 FEL-LOWS

2009 MEM-BERS

2011 2011 FEL-LOWS

2011 MEM-BERS

2013 2013 FEL-LOWS

2013 MEM-BERS

Institute of operations man-agement

NaN 0.25 0.75 NaN 0.666666666666667

0.333333333333333

NaN 0.666666666666667

0.333333333333333

Chartered Institute of Pur-chasing and Supply

NaN 0.571428571428572

0.428571428571429

NaN 0.375 0.625 NaN 0.6 0.4

Chartered Institute of Logis-tics and Transport

NaN 0.444444444444444

0.555555555555556

NaN 0.333333333333333

0.666666666666667

NaN 0.75 0.25

Association of Chartered Certified Accountants

NaN 0.230769230769231

0.769230769230769

NaN 0.4375 0.5625 NaN 0.533333333333333

0.466666666666667

Chartered Institute of Man-agement Accountants

NaN 0.777777777777778

0.222222222222222

NaN 0.428571428571429

0.571428571428572

NaN 0.666666666666667

0.333333333333333

Institute of Directors NaN 0.333333333333333

0.666666666666667

NaN 0.666666666666667

0.333333333333333

NaN 0.5 0.5

Chartered Management Insti-tute

NaN 1 0 NaN 0.5 0.5 NaN 1 0

Other( incl CIM) NaN 1 0 NaN 1 0 NaN 0.75 0.25

10.0%

30.0%

50.0%

70.0%

90.0%

110.0%

% S

PR

EA

D

R E S P O N D E N T

PROFESSIONAL BODY AFFILIATIONS

• Two or more parties (or individuals) engaging on matters of mutual interest, to agree on a way forward.

• Other definitions:

o Interaction between individuals acting either for themselves or as representatives of organised groups…May be exploratory and serve to formulate and delineate areas of agreement or contention (Nierenberg, 1968, pp. 2-3).

o A dialogue between two or more parties working towards making an agreement (Dignall, 2014, p.6 ).

o Two or more representatives or parties interacting in an explicit attempt to reach a jointly acceptable position on one or more divisive issues about which they would like to agree (Lysons and Farrington, 2012, p.527).

I N T R O D U C T I O N T O N E G O T I A T I O N S

NEGOTIATION - WHAT IS IT?

I T I S S I M P L Y A B O U T C O N S T R U C T I V E L Y E N G A G I N G

F O R M U T U A L B E N E F I T !

• An agreement is a negotiated understanding between two or more parties (Boateng, 2013).

• As a general rule, agreements may not legally be enforceable because they are not formal contracts. However, they can sometimes be used in legal cases if there is a dispute on specificities.

1 S T O U T P U T F R O M A C A R E F U L L Y P L A N N E D N E G O T I A T I O N

AN AGREEMENT - WHAT IS IT?

1. A N A G R E E M E N T F U R T H E R C O N C R E T I S E S T H E N E G O T I A T E D R E L A T I O N S H I P T E R M S !

2. A N O T H E R P O T E N T I A L O U T P U T O F N E G O T I A T I O N S I S A D I S A G R E E M E N T A N D

T H E P A R T I N G O F W A Y S .

P O T E N T I A L F I N A L O U T P U T F R O M A C A R E F U L L Y P L A N N E D N E G O T I A T I O N ?

A CONTRACT - WHAT IS IT?

A contract is an arrangement entered into voluntarily by two or more parties with the intention of creating a legal obligation, which may have elements in writing, though contracts can be made orally.

It is pieced together to supposedly help legally enforce relationship specificities (Agreement).

The remedy for breach of contract can be "damages," or compensation of money. In equity, the remedy can be specific performance of the contract, or an injunction. By definition a contract already assumes that there could be a problem, hence they are crafted…

For parties to honour agreed relationship specificities To protect the parties To be a warning to be careful or else!

Although a binding CONTRACT can (and often does) result from an AGREEMENT, an agreement typically documents the give-and-take of negotiated terms (RELATIONSHIP SPECIFICITIES), while a contract details both the relationship specificities and the permissible acceptable terms and conditions (normally in the form of a legally binding document ).

A G R E E M E N T S V E R S U S C O N T R A C T S

WHAT IS THE DIFFERENCE

O R G A N I S A T I O N S A R E I N C R E A S I N G L Y D I F F E R E N T I A T I N G

B E T W E E N A G R E E M E N T S

A N D C O N T R A C T S .

NEGOTIATIONA means to understand each others needs and requirements through engagement (Face-to-face, electronic, or other).

AGREEMENT Output from negotiations.Negotiated understanding between two or more parties.

Details the specificities of the relationship.

CONTRACTBinding document to protect interests - just in case something goes wrong.A means to legally solidify an agreement.

S U M M A R Y

THREE DIFFERENT CONCEPTS

W I T H C A R E F U L L Y N E G O T I A T E D A G R E E M E N T S ( S P E C I F I C I T I E S ) L E G A L L Y C R A F T E D C O N T R A C T S

( S U B J E C T T O T R U S T A N D J U R I S D I C T I O N ) M A Y N O T B E N E C E S S A R Y .

NEED identification Determine the

specificities for the NEED

Search for a partner/provider to

deliver the specificities

Undertake own independent research

on potential partners to ascertain capabilities

PREPARE & PLAN for the Negotiations

ENGAGE via

“NEGOTIATIONS”

Settle on relationship specificities

“AGREEMENT”

Draw up legally binding relationship terms

“CONTRACT”

Implement & monitor specificities and

relationship terms

FINDINGS FROM PURPOSIVE RESEARCH

S U M M A R Y

THE SCHEMATIC LINK BETWEEN THE THREE CONCEPTIONS

Purposive Research Findings

APPOINT A LEAD

NEGOTIATOR

Develop specific negotiation objectives

Assemble relevant and value adding

TEAM

Research and gather

information on YOUR

organisation and the supplier

Analyse information and

share information related to the strengths and

weaknesses of BOTH SIDES

with the TEAMEstablish

potential KEY issues and

positions for BOTH SIDES

Plan negotiation strategy,

including location, timing,

appointment of key

spokesperson on issues, etc.

Detail the negotiation

ACTION PLAN and TACTICS

with the TEAM

Review strategy and action plan

with TEAM

Undertake a MOCK

negotiation run with the TEAM

S U M M A R Y

PREPARING AND PLANNING FOR EFFECTIVE NEGOTIATIONS

F O R W I N - W I N N E G O T I A T I O N S

A L L P A R T I E S M U S T B E O N

T H E S A M E P A G E F R O M

T H E O U T S E T !

• APPOINT THE RIGHT LEAD NEGOTIATOR

The lead negotiator in conjunction with the TEAM must: o Have clear objectives.o Spend more time on the research and planning aspects of the negotiation. o Undertake some research on the potential supplier.o Have knowledge about the strengths and weaknesses of both sides.

• OBJECTIVELY SELECT THE RIGHT AND CAPABLE CROSS-FUNCTIONAL TEAM

• UNDERSTAND o YOUR own requirementso SUPPLIER requirementso YOUR own capabilitieso SUPPLIER capabilities

• THE CONTEXTo Local o Regional o International

… C O N T .

W I T H I N Y O U R O R G A N I S A T I O N A R E Y O U , A S T H E S U P P L Y C H A I N

P R O F E S S I O N A L , A W A R E O F A N Y F O R M A L

P R O C E S S T O A P P O I N T T H E L E A D N E G O T I A T O R F O R

R E L A T E D T R A N S A C T I O N S ?

G A U G I N G D I R E C T O R L E V E L P E R C E P T I V I T I E S O N A S P E C T S O F S U P P L Y C H A I N M A N A G E M E N T

EXCERPTS FROM PURPOSIVE ACTION

RESEARCH ON PERCEPTIVITIES ON

NEGOTIATIONS

Strongly Agree Agree Disagree Strongly Disagree

2009 0.638297872340426 0.212765957446809 0.0638297872340425 0.0851063829787234

2011 0.69811320754717 0.207547169811321 0.0377358490566038 0.0566037735849057

2013 0.76 0.2 0.02 0.02

5.0%

15.0%

25.0%

35.0%

45.0%

55.0%

65.0%

75.0%

Question 2

Axis Title

N E G O T I A T I O N S A R E I N T E G R A L T O V A L U E C H A I N P E R F O R M A N C E , P R O D U C T , A N D S E R V I C E Q U A L I T Y

QUESTION 2:


2009 0.425531914893617 0.297872340425532 0.191489361702128 0.0851063829787234

2011 0.264150943396226 0.320754716981132 0.30188679245283 0.113207547169811

2013 0.22 0.24 0.4 0.14

2.5%

7.5%

12.5%

17.5%

22.5%

27.5%

32.5%

37.5%

42.5%

QUESTION 4

Axis Title

I N M Y O R G A N I S A T I O N , W E V I E W A G R E E M E N T S A N D C O N T R A C T S A S T E C H N I C A L L Y T H E S A M E T H I N G

QUESTION 4:


2009 0.148936170212766 0.212765957446809 0.361702127659574 0.276595744680851

2011 0.207547169811321 0.226415094339623 0.30188679245283 0.264150943396226

2013 0.22 0.26 0.28 0.24

2.5%

7.5%

12.5%

17.5%

22.5%

27.5%

32.5%

37.5%

QUESTION 5

Axis Title

I N M Y O R G A N I S A T I O N , P R O C U R E M E N T I S I N V O L V E D I N T H E I N I T I A L N E G O T I A T I O N P R O C E S S W I T H A P O T E N T I A L S U P P L I E R

QUESTION 5:


2009 0.595744680851064 0.297872340425532 0.0851063829787234 0.0212765957446808

2011 0.622641509433962 0.245283018867925 0.0754716981132076 0.0566037735849057

2013 0.62 0.28 0.06 0.04

5.0%

15.0%

25.0%

35.0%

45.0%

55.0%

65.0%

QUESTION 6

Axis Title

M Y O R G A N I S A T I O N ' S L E G A L D I R E C T O R I S I N V O L V E D I N T H E I N I T I A L N E G O T I A T I O N P R O C E S S W I T H A P O T E N T I A L S U P P L I E R

QUESTION 6:


2009 0.702127659574468 0.212765957446809 0.0425531914893617 0.0425531914893617

2011 0.679245283018868 0.226415094339623 0.0566037735849057 0.0377358490566038

2013 0.735849056603774 0.207547169811321 0.0377358490566038 0.0188679245283019

5.0%

15.0%

25.0%

35.0%

45.0%

55.0%

65.0%

75.0%

QUESTION 7

Axis Title

M Y O R G A N I S A T I O N ' S F I N A N C E D I R E C T O R I S I N V O L V E D I N T H E I N I T I A L N E G O T I A T I O N P R O C E S S W I T H A P O T E N T I A L S U P P L I E R

QUESTION 7:


2009 0.319148936170213 0.212765957446809 0.276595744680851 0.191489361702128

2011 0.377358490566038 0.245283018867925 0.207547169811321 0.169811320754717

2013 0.48 0.26 0.12 0.14

5.0%

15.0%

25.0%

35.0%

45.0%

55.0%

QUESTION 8

Axis Title

M Y O R G A N I S A T I O N ' S S U P P L Y C H A I N D I R E C T O R I S I N V O L V E D I N T H E I N I T I A L N E G O T I A T I O N P R O C E S S W I T H A P O T E N T I A L S U P P L I E R

QUESTION 8:

Up to 25% of related time

26%-50% of related time

51%-75% of related time

76%-100% related time

5.0% 15.0% 25.0% 35.0% 45.0% 55.0% 65.0%Up to 25% of related time 26%-50% of related time 51%-75% of related time 76%-100% related time

2009 0.622222222222222 0.133333333333333 0.155555555555556 0.0888888888888889

2011 0.547169811320755 0.207547169811321 0.132075471698113 0.113207547169811

2013 0.5 0.24 0.14 0.12

Question 17

I N M Y O R G A N I S A T I O N , W E A P P R O X I M A T E L Y S P E N D T H E F O L L O W I N G O N I D E N T I F Y I N G T H E N E E D S O F O U R P O T E N T I A L S U P P L I E R

QUESTION 17:

Procurement

Legal

Operations

Information systems

Finance

Supply chain management

Customer Service

2.5% 7.5% 12.5% 17.5% 22.5% 27.5% 32.5% 37.5%Procurement Legal Operations Information sys-

temsFinance Supply chain

management Customer Ser-

vice

2009 0.106382978723404

0.297872340425532

0.0425531914893617

0.0425531914893617

0.340425531914894

0.148936170212766

0.0212765957446808

2011 0.132075471698113

0.283018867924528

0.0188679245283019

0.0188679245283019

0.320754716981132

0.207547169811321

0.0188679245283019

2013 0.12 0.28 0.02 0.02 0.3 0.24 0.02

Question 18

Axis Title

I N M Y O R G A N I S A T I O N , T H E F O L L O W I N G N O R M A L L Y L E A D S T H E I N I T I A L N E G O T I A T I O N P R O C E S S W I T H A P O T E N T I A L S U P P L I E R

QUESTION 18:


2009 0.297872340425532 0.446808510638298 0.106382978723404 0.148936170212766

2011 0.30188679245283 0.433962264150943 0.132075471698113 0.132075471698113

2013 0.3 0.42 0.12 0.16

2.5%

7.5%

12.5%

17.5%

22.5%

27.5%

32.5%

37.5%

42.5%

47.5%

Question 20

Axis Title

I N M Y O R G A N I S A T I O N , P R O C U R E M E N T I S R E S P O N S I B L E F O R T H E I M P L E M E N T A T I O N A N D M O N I T O R I N G O F A S U P P L I E R C O N T R A C T

QUESTION 20:


2009 0.340425531914894 0.276595744680851 0.212765957446809 0.170212765957447

2011 0.320754716981132 0.283018867924528 0.207547169811321 0.188679245283019

2013 0.32 0.26 0.22 0.2

2.5%

7.5%

12.5%

17.5%

22.5%

27.5%

32.5%

37.5%

Question 21

Axis Title

I N MY ORGANI SATI ON, THE CO NCEPTS OF BA RGA I N I NG AND NEG OTI AT I ONS W I T H S U P P L I E R S A R E V I E W E D A S O N E O F T H E S A M E T H I N G

QUESTION 21:


2009 0.361702127659574 0.340425531914894 0.170212765957447 0.127659574468085

2011 0.39622641509434 0.358490566037736 0.113207547169811 0.132075471698113

2013 0.44 0.28 0.16 0.12

2.5%

7.5%

12.5%

17.5%

22.5%

27.5%

32.5%

37.5%

42.5%

47.5%

Question 22

Axis Title

NEGOTI AT I ON S K I LLS MUST BE A CORE S TRENG TH OF THE S UPP LY CHA I N MANA GEMENT P ROFESS I ONAL

QUESTION 22:


2009 0.191489361702128 0.276595744680851 0.340425531914894 0.191489361702128

2011 0.226415094339623 0.226415094339623 0.283018867924528 0.264150943396226

2013 0.24 0.26 0.26 0.24

2.5%

7.5%

12.5%

17.5%

22.5%

27.5%

32.5%

37.5%

QUESTION 23

Axis Title

NEGOTI AT I ON S K I LLS MUST BE A CORE S TRENG TH OF THE PROCUREMENT PROFESSI ONAL

QUESTION 23:

• Procurement is generally relegated to the backbenches of negotiations with suppliers.

• Finance and legal are still the most powerful functions during the negotiation process in both public and private sectors.

• Agreements and contracts are increasingly being seen as different things.

• General misunderstandings related to the difference between bargaining and negotiations were evident.

• Negotiations are seen as a trigger for long term value creation.

S U M M A R Y O F D I R E C T O R L E V E L P E R C E P T I V I T I E S O N N E G O T I A T I O N S

• Relatively less time is spent on researching supplier and partner capabilities.

• Procurement is generally responsible for implementing and monitoring contracts which they were generally not involved in crafting.

• Too much time is currently being spent on the LEGAL aspects of business relationships, as opposed to the AGREEMENT aspects of business relationships.

• Initial negotiations are seen as critical to service quality.

C O N T.

P o l i c y m a k e r s a n d b u s i n e s s l e a d e r s o f t e n u n d e r e s t i m a t e t h e i m p l i c a t i o n s

o f n e g o t i a t i o n s .

M o r e t i m e a n d e f f o r t i s s p e n t o n t h e p r i c i n g a n d l e g a l a s p e c t s o f a r e l a t i o n s h i p

a s o p p o s e d t o n e g o t i a t i n g t h e r e l a t i o n s h i p s p e c i f i c i t i e s – A G R E E M E N T

Perceptivities can only be changed by the SCM fraternity through thought leading, knowledge, confidence, and value add.

• Do you see yourself as:– A professional (e.g. an accountant, medical doctor) or – Just a practitioner (e.g. purchaser, a buyer, a procurement officer, or a supply chain professional?).

• Are you seen as:– Being on top of your negotiation game, or– A bargaining expert or negotiator, or– Total acquisition cost of ownership driven– An initiator, leader, or– A backroom practitioner and implementer?

• Individual mindset change required – From practitioner to a proud professional.

A C T I O N S R E Q U I R E D

INTROSPECTION NEEDED BY THE SUPPLY CHAIN PROFESSION

C O N T .

A R E Y O U A P R O F E S S I O N A L

P R O C U R E R W H O I S S E E N B Y P E E R S T O

B E A N E X P E R T N E G O T I A T O R

O R

A S K I L L E D B U Y E R W I T H S T R O N G

B A R G A I N H U N T I N G A N D

P R I C E C H I S E L I N G S K I L L S ?

• Do you REALLY engage to negotiate to agree o Win-Lose relationship for your organisation? o Win-Win relationship for your organisation?o Lose-Lose relationship for your organisation?

• Do you negotiate with: o The value chain in mind, o The organisation in mind, oro The country or region in mind?

• Do your policy makers and directors see: – Your negotiations value add?– The strategic link between negotiations and

o Value chain performance? o Service delivery quality?o Competitiveness ?o National building and economic development?

• SCM fraternity must share more success stories beyond PRICE CHISELING, QUALITY, and COMPLIANCE.

• In consultation with industry leaders and professionals, academia/ trainers must give serious consideration to revising supply chain management curricula, in particular programmes on Negotiations, Agreements, and Contracts.

• Professionalisation is criticalo License to practice message must be intensified globally by CIPS and current professionals.o Process must be collectively accelerated.

• Brand positioning of professional bodies representing the procurement aspects of supply chain management is still relatively weak in the boardroom.o Good progress, BUT CIPS must further intensify efforts with C-Suite bodies.

A C T I O N S R E Q U I R E D

WHAT CAN WE COLLECTIVELY DO?

L E S S T H A N 1 0 % O F D I R E C T O R L E V E L P A R T I C I P A N T S W E R E A W A R E O F C I P S ! ! !

• Success depends on us!!! • Change depends on us.• Confidence through knowledge. • Bold and innovative. • Collectively raise your voice. • Use facts and value add to change current C-Suite perceptivities. • Related human capital transformation must be focused on the long-term.• Professionals and academia must work together to update curricula. • Intensify mentorship and coaching efforts especially at directorship levels. • Collective effort needed between:

o Practitioners and professionals across the supply chain industryo Professional bodies – CIPS must be actively supported, etc.o Government and SCM community.

• Innovative, global standards for SCM education and training.

C R I T I C A L S U C C E S S F A C T O R S

P E R C E P T I O N S C A N B E C O M E R E A L I T Y I F N O T C O R R E C T E D !

• Knowing what you want.

• Going for what you want.

• Having an appreciation of when you want it.

• Appreciating what others want.

• Compromising for mutual benefit.

• Understanding the impact on the value chain.

• Understanding the difference o Professional vs Practitioner.

• Becoming an expert negotiator.

• Understanding the link between: o Up-to-date best practice, knowledge,

and self confidence, o Professionalism, ando Respect and appreciation from EXCO

T H E B I G Q U E S T I O N !

WHAT IS IT THAT YOU WANT TO BE?

D O N O T T H I N K O U T S I D E T H E B O X …

R A T H E R G E T R I D O F T H E B O X ! T H I S W I L L H E L P Y O U T O T R A N S F O R M

Y O U R S E L F F R O M A S K I L L E D B U Y E R A N D B A R G A I N

H U N T E R T O A P R O F E S S I O N A L P R O C U R E R A N D

E X P E R T N E G O T I A T O R !

FDI at an all time high. $326 BILLION IN MEGA PROJECTS (Deloitte 2014)

Yet, unemployment is also at a record level.

Regional wide frustrations with service delivery quality are on the increase.

Lack of agreement specificities has lead contract litigation to be at an all time high!

A person cannot eat GDP. Growth must reach all.

Donald Kuberenka, President and CEO, African Development Bank, 2014.

Africa is rising and growing BUT FOR WHOM?

Douglas Boateng (SBLUNISA, April 2014)

“Africa is not rising for ordinary citizens…The continent is still home to 6 of the 10 most

unequal countries in the world.”

Winnie Byanyima, Executive Director, Oxfam International, May 2014

“Sub Saharan Africa has taken off but POVERTY remains stuck at unacceptably high

levels, still afflicting about 45% of the regions households.”

Christine Largarde, Head of IMF Mozambique, May 2014

F R O M T H E O U T S E T W E R E O U R P O L I C Y M A K E R S A N D B U S I N E S S L E A D E R S

O N T H E S A M E P A G E W I T H T H E I R S U P P L I E R S A N D I N T E R N A T I O N A L I N V E S T O R S ? !

A F R I C A ! S O M E I N T E R E S T I N G F A C T S

Pontificating achievements through the

number of millionaires created is good.

HOWEVER, long term socio-economic stability

can only be sustained through how many people governments and private

sector executives continuously manage to

lift above the poverty line.

Boateng, 2013

R E - G A U G I N G D I R E C T O R L E V E L P E R C E P T I V I T I E S O N A S P E C T S O F S U P P L Y C H A I N M A N A G E M E N T

WHAT NEXT?

S U B J E C T T O F U N D I N G A V A I L A B I L I T Y P U R P O S I V E R E S E A R C H O N

D I R E C T O R L E V E L P E R C E P T I V I T I E S O N S C M T O B E R E P E A T E D D U R I N G ½ Q T R 2 0 1 6

W I T H A M U C H W I D E R G L O B A L A U D I E N C E

Report will be freely

available to all CIPS members

and SCM students

The final report will be available on the 31st of JULY 2015 • It will provide all of the relevant data on director level perceptivities on aspects of supply chain

management, including:

o Supplier chain management o Negotiations o Procurement

+ Strategic sourcing + Supplier relationship management

o Customer relationship management o Demand management

• Continued under representation of supply chain management and procurement professionals in initial negotiations is causing “SHORT TERM GAIN BUT MEDIUM TO LONG TERM PAIN.”

• Negotiation is about constructive engagement for mutual benefit.

• Negotiations and bargaining are two distinct concepts requiring different approaches.

• Walking away from negotiations is an AGREEMENT not to engage.

• In the emerging world, tactics for AGREEMENTS and subsequent CONTRACTS must be different.

• Negotiation is not about price chiseling– If during negotiation you find the supplier is short changing itself you must be frank and open.– It is about finding a common ground for each other’s needs.

• Going into negotiations with an “I must win attitude” is short term thinking and POTENTIALLY HARMFUL.

– Yes you may win in the short term, BUT there could be unintended consequences!– Both parties must be comfortable with the negotiated outcome, i.e. Specificities for the relationship.

F I N A L F O O D F O R T H O U G H T

F O R P O S I T I V E I M P A C T , A L L P A R T I E S T O A B U S I N E S S R E L A T I O N S H I P M U S T T O B E O N T H E S A M E P A G E F R O M

T H E O U T S E T . H E N C E T H E N E E D F O R P R O F E S S I O N A L S U P P L Y C H A I N M A N A G E M E N T

P E R S O N N E L T O B E I N V O L V E D I N T H E D I S C U S S I O N S F R O M T H E B E G I N N I N G .

+ Tel: +27 11 469 3860 (SA) + Cell: +27 82 335 2688 (SA)

+ Fax: +27 11 469 3207 (SA) + Email: [email protected]

+ www.panavest.com

Prof Douglas Boateng (MSc, EngD, FCILT, FIoD, FCMI, FIC, FIOM FCIPS, Finst.D)

Professor Extraordinaire - Supply and Value Chain Management.

IOM Extraordinary Chair in Operations and Supply Chain Management Professional Development

Full presentation shall be available on: www.panavest.com And www.douglasboateng.com and CIPS website to download from 30th MAY 2015

THANK YOU

“May the ALMIGHTY continue to Bless Africa”

prof douglas boateng (msc, engd, fcilt, fiod, fcmi, fic, fiom, fcips, finst.d ) professor...

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