SHANTO-MARIAM UNIVERSITY OF

CREATIVE TECHNOLOGY

Department of Apparel Manufacturing Management & Technology

10th SEMESTER

Module Title: Sourcing & Negotiation

Module Code: AMM 4115

Module Leader: Noorul Muqaddim

Module Teacher: Lablu Miah, SK MAMUN

Updated on: February 18, 2019.

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Module Title: Sourcing & Negotiation
Module Code: AMM–4115
Year of Study: 4th (Semester: 10th)
Contact Hours: Lectures – 1.5 Hours / Week
Total Contact Hours: 18 Hours
Credits: 2
Assessment: Class Test, Viva, Assignment, Mid-Term and Final Examination

Aim:
This module is anticipated to explore students various factors that influence decisions about
whether sourcing activity is performed with proper kind of negotiation skills within the firm or
outsourced.
The goal of this course is to enable students to consider all the tradeoffs under the chain of
negotiation interface involved when making sourcing decisions to maximize value extracted
from every stage of a sourcing relationship.

Objectives:
By the end of the module, Students will be able to:
• understand the role of sourcing in an organization.
• discuss factors that affect the decision to outsource in an operation.
• identify dimensions of supplier performance concerning negotiation that affect total cost.
• structure the successful auctions of sourcing and negotiations.
• discuss the impact of risk sharing on sourcing performance and information distortion.

Lesson Plan:
Syllabus Outline and Teaching Plan (Lectures):

1. Understanding the sourcing and sourcing decision, Range of sourcing policy and procedures.
2. Different steps in sourcing or purchasing cycle.
3. Sourcing condition and specification and value analysis.
4. Supplier scoring and assessment concerning global sourcing, Sourcing planning and analysis.
5. Risk management in sourcing and strategic sourcing.
6. Legal aspects of sourcing and environmental procurement.
7. Global sourcing and contract management, E-sourcing and new vendor development
enlistment.
8. Introduction and understanding the negotiation, Basic principles of negotiation and elements
of contract.
9. Negotiation approaches and anatomy of contracts.
10. Strategic negotiation process model and derivation of negotiation agenda.
11. Managing complex negotiations and compiling the negotiation plan.
12. Communicating for major negotiations and the negotiators’ surplus, Formal negotiation
procedures and gradation of recognitions.

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Class Contact and Teaching Pattern:
Lectures : 12
Total Hours : 18
Learning Outcomes:
After completion the module, students should be able to:
• comprehend the basics connections and exchanges in comprehensive sourcing.
• realize the role of the strategic sourcing and negotiations.
• extend the dexterity and knowledge requisite to grip and negotiate with both buyer and
supplier.
• understand the expertise, indispensable to sourcing and comparative negotiations.
• value the convoluted sourcing and the agenda of negotiation in global business.

Text Books:
• Purchasing and Materials Management – P Gopal A Krishnan
• Strategic Negotiation – Professor Gavin Kennedy

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 Lesson Plan

Module: Sourcing & Negotiation Module Code: AMM4115 Contract hours/week:1.5

Week Lecture Topic (Lecture Title) Assessment

Understanding the Sourcing, Scope of

1 1 Sourcing Policy and Procedures
Different Steps in Sourcing or
2 2 Purchasing Cycle.
Sourcing Requirement and Assignment Giving
3 3 Specification.
Supplier Scoring and Assessment,
4 4 Sourcing Planning and Analysis.
Risk Management in Sourcing and
Class Test
5 5 strategic sourcing
Legal Aspects of Sourcing and Assignment
6 6 procurement analysis Submission
Mid-Term Examination

Global Sourcing and Contract Assignment Giving

Management, E-Sourcing and Vendor
7 7 Development Enlistment.
Introduction and Understanding the
Negotiation, Basic Principles of
8 8 Negotiation
9 9 Negotiation Approaches and Anatomy
of Contracts.
10 10 Strategic Negotiation Process Model.

11 11 Managing Complex Negotiations.

Class Test
12 12 Gradation of Negotiations Presentation, Viva &
Submission

Final Examination

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 Module Continuous Assessment Timetable

Course: B.A (Honors) in Apparel Manufacturing Management & Technology

 Module Title : Sourcing & Negotiation

 Module Code : AMM- 4115
 Year of Study : 4th (Semester: 10th)
 Assessment Way : Class Test, Viva, Assignment, Mid-Term and Final Examination

Assessment 1 2 3 4 5 6 Mid-Term 7 8 9 10 11 12 Final

Description Examination Examination
Weeks

Class Test
On:

Up to Class 3

Class Test 5%
On: 10%

Up to Class 6

20%
Viva On
Written
Up to class 9 Examination

Assignment 5%
On 40%
10%
Global Written
sourcing Examination
analysis and
negotiations
techniques

At

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Module Title: Sourcing & Negotiation
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Vendor Development:
Vendor Development can be defined as any activity that a Buying Firm undertakes to improve a
Supplier's performance and capabilities to meet the Buying Firms' Supply needs.

Module Title: Sourcing & Negotiation

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Module Code: AMM-4115
Lecture: 08, Week: 08

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The Win-Lose Approach to Negotiation
Negotiation is sometimes seen in terms of ‘getting your own way’, ‘driving a hard bargain’ or ‘beating off
the opposition’. While in the short term bargaining may well achieve the aims for one side, it is also a
WIN-LOSE approach. This means that while one side wins the other loses and this outcome may well
damage future relationships between the parties. It also increases the likelihood of relationships
breaking down, of people walking out or refusing to deal with the ‘winners’ again, and the process
ending in a bitter dispute.
WIN-LOSE bargaining are probably the most familiar form of negotiating that is undertaken.
Individuals decide what they want, then each side takes up an extreme position, such as asking the
other side for much more than they expect to get. Through haggling – the giving and making of
concessions – a compromise is reached, and each side’s hope is that this compromise will be in their favor.
Module Title: Sourcing & Negotiation
Module Code: AMM-4115
Lecture: 09, Week:09

Topic: Negotiation Approach and Anatomy of Contract

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Negotiation Approaches:

While this form of bargaining may be acceptable in the used car market, for most situations it has
drawbacks. These can have serious consequences if applied to social situations. For example:
It may serve to turn the negotiation into a conflict situation, and can serve to damage any
possible long-term relationship.
It is essentially dishonest – both sides try to hide their real views and mislead the other.
The compromise solution may not have been the best possible outcome – there may have
been some other agreement that was not thought of at the time - an outcome that was both
possible and would have better served both parties.
Agreement is less likely to be reached as each side has made a public commitment to a
particular position and feels they must defend it, even though they know it to be an extreme
position originally.
While there are times when bargaining is an appropriate means of reaching an agreement, such as
when buying a used car, generally a more sensitive approach is preferable. Negotiation concerning
other people’s lives is perhaps best dealt with by using an approach which takes into account the effect
of the outcome on thoughts, emotions and subsequent relationships.

Focus on Maintaining the Relationship according to the Negotiation

This means not allowing the disagreement to damage the interpersonal relationship, not blaming the
others for the problem and aiming to confront the problem not the people. This can involve actively
supporting the other individuals while confronting the problem. Remember; separate the people from
the problem.
Disagreements and negotiations are rarely ‘one-offs’. At times of disagreement, it is important to remember that you
may well have to communicate with the same people in the future. For this reason, it is always worth considering
whether ‘winning’ the particular issue is more important than maintaining a good relationship.
All too often disagreement is treated as a personal affront. Rejecting what an individual says or does is
seen as rejection of the person. Because of this, many attempts to resolve differences degenerate into
personal battles or power struggles with those involved getting angry, hurt or upset.

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Remember negotiation is about finding an agreeable solution to a problem, not an excuse to undermine others,
therefore, to avoid negotiation breaking down into argument, it is helpful to consciously separate the issues under
dispute from the people involved. For example, it is quite possible to hold people in deep regard, to like them, to
respect their worth, their feelings, values and beliefs, and yet to disagree with the particular point they are making.
One valuable approach is to continue to express positive regard for an individual, even when disagreeing with what
he/she is saying.

The following are examples of statements that might be used by a good negotiator:
“You’ve expressed your points very clearly and I can now appreciate your position. However...”
“It’s clear that you are very concerned about this issue, as I am myself. Yet from my viewpoint...”
Another way of avoiding personal confrontation is to avoid blaming the other party for creating the
problem. It is better to talk in terms of the impact the problem is having personally, or on the organization or situation,
rather than pointing out any errors.
By not allowing ‘disagreements over issues’ to become ‘disagreements between people’, a good relationship can be
maintained, regardless of the outcome of the negotiation.

Contracts in a Flow

Consider all Viewpoints

During negotiation, a great deal of time can be spent in establishing the facts. However, it should be realized that
‘facts’ tend to provide another area over which to disagree. Another person’s worries, even if totally unfounded, are
still real worries and need to be taken into consideration.
Conflicts often arise because of differences in personal viewpoints. Remember that to accept and understand
someone else’s viewpoint does not imply agreement with that point of view. Rather, it shows respect for the person
and the wish to work together to find a mutually satisfactory solution.

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Similarly, it is helpful to encourage the other person to understand your viewpoint. An open, honest and accepting
discussion of the differences in perspective will often help to clarify the issues and provide the way forward to a
resolution.

Module Title: Sourcing & Negotiation

Module Code: AMM-4115
Lecture: 10, Week: 10

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Good negotiation starts with knowing what you want and putting it forth in conversation. This requires a substantial
amount of preparation and asking the right questions through the discovery process, rather than improvising
responses in calls and emails. When you negotiate from a position of strong preparation, the other party will be more
comfortable meeting you on your terms, based on your
expertise.

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Strategic sourcing

Strategic sourcing is an institutional procurement process that continuously improves and re-evaluates the
purchasing activities of a company. In the services industry, strategic sourcing refers to a service solution, sometimes
called a Strategic Partnership that is specifically customized to meet the client's individual needs. In a production
environment, it is often considered one component of supply chain management.

Steps

The steps in a strategic sourcing process were defined, in 1994.

1. Assessment of a company's current spending (what is bought, where, at what prices?).

2. Assessment of the supply market (who offers what?).

3. Total cost analyses (how much does it cost to provide those goods or services?).

4. Identification of suitable suppliers.

5. Development of a sourcing strategy (where to purchase, considering demand and supply situations, while
minimizing risk and costs).

6. Negotiation with suppliers (products, service levels, prices, geographical coverage, Payment Terms, etc.).

7. Implementation of new supply structure.

8. Track results and restart assessment (Continuous cycle)

Steps for Ethical Negotiations

Assessing the Situation

No matter the negotiation approach an individual chooses, the place to start is by doing one's homework.
This may seem apparent enough, but it is startling how many people risk their negotiations by cutting out
this short step. Undoubtedly, it is not always cost-effective or beneficial to do in-depth pre-negotiation
research, but rarely should an individual miss this important point.

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Building Mutual Trust

One of the many fears and suspicions of negotiations is the idea that the other party is likely to be
dishonest and will unfairly exploit any weakness displayed by an honest negotiator. This suspicion and fear
may be overcome if a climate of mutual trust can be developed.

The general principle behind the trust building mechanisms is that to be trusted, one should establish both
trustworthiness and the ability to trust. As Adam Smith observed, "We trust the [person] who seems willing
to trust us. If we want to be trusted, we have to be able to show trust in return. Often, this trust will be
reciprocated. It will encourage honesty and reduce negative costs from poor negotiation. In many cases, it
will invite opportunistic exploitation of mutual benefits for both parties. As sound as this may seem, the
process must still be managed very carefully.

Self-Protection

Given the uncertainties associated with business negotiation, some component of self-protection from
actions committed by the other party must be in place. Caveat emptor (Let the Buyer Beware) may not
always be a sound legal rule, but it is reasonable advice for negotiators in many arm's length business
transactions.

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Module Title: Sourcing & Negotiation
Module Code: AMM-4115
Lecture: 11, Week: 11

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Module Title: Sourcing & Negotiation
Module Code: AMM-4115
Lecture: 12, Week: 12

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Review and discussion

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