These two skills make for a good negotiator.
Dual responsibility for company profitability and customer satisfaction makes program management among the most difficult jobs in EMS. While the program manager is responsible for coordinating the resources of EMS production on behalf of their customers, most have no authority over the people who control those resources. Program managers who excel in negotiation accomplish more than those who don’t.
What makes a good negotiator? Two skills are particularly helpful. First, good negotiators have a plan. They understand what they need and know what they are willing to compromise on to get there. They also understand what the other party needs in terms of justification and build a business case to ensure the other party understands the benefits of agreeing to the proposal. Second, the ability to read the room and build relationships is key to successful negotiations. It’s difficult to reach a good deal with someone you don’t like or trust.
So, what does that look like in actual practice? Let’s consider a few complementary goals. A complementary goal represents a win for both the program manager and customer. For example, customers prefer finished goods kanban because it ensures a safety stock to cover shipment delays or demand spikes. Nevertheless, finished goods kanban drives costs related to storage space, the cost of goods, and personnel activities for maintenance. A complementary goal could include changes in payment terms or pricing to offset the costs of carrying that extra inventory. Similarly, if a customer requests zero defects at first-pass inspection, a complementary goal could involve achieving complete conformance to design for manufacturability (DfM) recommendations.
Building a business case requires research. What customer behavior does the program manager want to change? What benefits will the customer gain from that behavior change? Will they save money? Will they receive products faster? Will it reduce the resources required at their facility? Will quality improve? If the customer can’t see a measurable benefit, they are unlikely to change their behavior. Therefore, a key element in creating a business case is determining how your request will benefit the customer.
Another critical element of the business case is the underlying data. How do you demonstrate your point? Do you provide a cost analysis? Present quality data trends? Include a define/measure/analyze/improve/control (DMAIC) study that shows a design of experiments (DoE) supporting your assumptions? Customers need data to make informed decisions.
When negotiating for resources within your company, you must also build a strong business case. Who makes up the decision team at the customer’s organization? What legwork have you done to ensure they will follow through on promises if you provide additional resources? How will giving them added resources (like line time, engineering support, etc.) benefit your company? What projected revenue growth can you expect if you add those resources? What is the downside risk if you don’t add the resources? What is this customer’s track record regarding forecasts and promises of additional business?
When program managers do their homework, they increase the likelihood of successful negotiations. Outsourced manufacturing often resembles controlled chaos. Internally, production personnel must make choices related to capacity and resource allocation, particularly during unpredictable demand. Externally, customers frequently encounter challenges such as cost control, unexpected changes in market demand, or shifting internal preferences regarding EMS providers or locations. If a selected supplier performs poorly on a large program, customers risk losing their jobs. These issues create a strong need for trust, transparency and reliable data during negotiations. When negotiating, put yourself in the other party’s shoes. What pressures do they face? What data do they need to make informed decisions? What information do they need to advocate for your idea within their organization?
Building trust in a relationship takes time. The first step involves keeping commitments. Another element is making the other party feel comfortable. Are they relationship-oriented or task-oriented? A relationship-oriented person enjoys small talk in every meeting, while a task-oriented person prefers an agenda, solid data and a meeting that starts on time. Mirroring the other party’s preferences in these types of interactions helps build subliminal trust. Relationship building can also benefit from activities that don’t focus on solving a problem or negotiating a behavior change. Engaging in quarterly business reviews (QBRs), management visits or general presentations on improving overall outcomes through continuous improvement methods or utilizing additional EMS provider resources can strengthen trust and relationships.
Program managers who focus on building strong relationships, empathizing with the other party and building strong business cases during negotiations are better positioned to thrive in the chaos typical of most EMS environments.
Susan Mucha is president of Powell-Mucha Consulting Inc. (powell-muchaconsulting.com), a consulting firm providing strategic planning, training and market positioning support to EMS companies and author of Find It. Book It. Grow It. A Robust Process for Account Acquisition in Electronics Manufacturing Services. She can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..
