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Buying healthcare equipment in 2017’s uncertain regulatory landscape requires supply chain leaders to carefully consider clinical outcomes with the economies of purchase. With many clinicians involved in negotiations, a dearth of market intelligence, and changing supplier-buyer relationships, supply chain leaders must possess sharp negotiation skills. This is the key to maximizing your equipment budget.
In this seven-part series, OpenMarkets is pleased to share key negotiation strategies that are directly applicable for supply chain leaders when purchasing equipment.
Topic 4: Distributive and Integrative Negotiations
There are two main approaches to negotiations – distributive and integrative. Choosing the right approach will be important for negotiation outcome and long-term relationship with the other party.
Distributive negotiations, also known as ‘fixed pie strategy’, is the approach used when parties are trying to divide up finite resources. Since resources are finite, both parties view each other as an adversary and put their best foot forward to maximize their size of the pie. Some of the common tactics used in this approach include: trying to gain an advantage by setting up the rules for negotiation, conducting research on the other party, or using deception, threats, and ultimatums, to outsmart the opposition with an aggressive offer. The outcome of such a negotiation always results in one party winning and the other party losing i.e. a win-lose situation.
On the contrary, integrative negotiations involve mutual coordination and cooperation to maximize joint outcomes. Integrative negotiations are used as a conflict management tool where two parties are working towards a situation where one party wins not at the cost of the other party, i.e. ‘expanding the pie strategy’. Since there is coordination, both the parties are open and often share information such as needs, desires, concerns, and fears. The result of such cooperation is a win-win situation for both parties.
As a supply chain leader, not all approaches are suitable for all situations. If your negotiation position and BATNA are strong, you can undertake a distributive negotiation. For example, if you have quotes for the same product with different vendors, you are in a great position to negotiate strongly with a preferred seller. Contrary to this, it may be advantageous to consider an integrative approach if you value the relationship long term and don’t want to spoil it with a one-time deal.
Ultimately, varying these two strategies based on available time, relationship consideration, and your bargaining strength will make you strong on the negotiation table. The OpenMarket Exchange can complement both negotiation strategies, becoming the platform of choice the next time you purchase.