Using Chatbots For More Effective Negotiations
Negotiation is a core skill for purchasing professionals, something to continuously work on improving. Whether it’s cutting a deal with a key supplier or mapping out a sourcing plan with internal stakeholders, negotiation is a daily activity for most buyers, sourcing managers, and procurement directors.
It’s surprising how easy – and useful – AI chatbots like ChatGPT, Copilot, and Gemini are proving to be for negotiation prep.
Here are five different use cases for free versions of chatbots related to negotiation:
- Identify current market trends using AI Chatbots
- Gather information on alternative suppliers
- Develop strategies for achieving negotiation goals
- Suggest negotiation tactics based on the negotiations style of the other party
- Identify what your counterparty is likely to find important for a specific negotiation
The best part is, none of these use cases require you to upload documents or share sensitive information, a common concern when using chatbots.
Here’s some examples you can use (replace the [bracketed] values with your actuals).
Identify Current Market Trends using AI Chatbots
You don’t want to go into a commercial negotiation with less knowledge than your counterparty.
Here’s a couple of use cases and example prompts you can use to ensure you’re up to speed on current market trends affecting your supply base.
| Situation | Example Prompt |
|---|---|
| You need to prepare to negotiate a long-term supply agreement and want to understand the current market trends for a specific commodity. | You are a buyer for a manufacturing company preparing to negotiate a long-term supply agreement with a [high-pressure aluminum die casting] manufacturer. Search the web and summarize current market trends for [high-pressure aluminum die castings]. |
| You need to understand price trends and predict future price movements for a commodity. | You are a buyer in a [plastics] manufacturing company. Search the web and summarize price movements over the last five years and likely future price movements for [Nylon 6]. |
Gather Information on Alternative Suppliers
Most buyers have gotten to know quite a bit about their current suppliers, but don’t have time to investigate alternatives.
Here’s a couple of use cases to quickly learn what alternative suppliers can bring to the table.
| Situation | Example Prompt |
|---|---|
| You want to understand who the main competitors are of a current supplier. | You are a buyer for [an automotive components supplier] that buys [high-pressure die-castings] from [Supplier Name]. Search the web to identify their main competitors for [high-pressure die-castings] with [North American] manufacturing plants. |
| You want to understand the products and services offered by competitors of a current supplier. | You are a buyer at a manufacturing company. Read the websites for the following companies and for each company, create a bullet point list of products and services they offer: [SUPPLIER NAMES]. |
Develop Strategies for Achieving Negotiation Goals
Here’s couple of examples for ideas to expand your negotiation playbook when faced with certain common situations.
| Situation | Example Prompt |
|---|---|
| You want to negotiate favorable pricing terms with a long-time supplier without having to conduct a market test. | As a buyer, you are negotiating pricing with a long-time [stamping] supplier. Your company currently uses [three] additional [stamping suppliers], and you are investigating adding others to achieve cost goals. You are meeting with this supplier prior to conducting a market test in the hope that you will be able to negotiate a contract with them that guarantees no price increases for two years, other than index-based price changes for materials. What negotiation strategies should you consider to achieve this goal? |
| You have market tested the materials supplied by a company and found better pricing from their competitors. You want to negotiate cost downs with the current supplier because switching costs are high. | As a buyer, you have market tested the [wire harnesses] currently purchased from a long-time supplier and found their pricing is [10-15%] higher than currently available for the same products and service levels. You want to negotiate cost reductions with the current supplier to avoid having to change suppliers. What negotiation strategies should you consider to achieve this goal? |
Suggest Negotiation Tactics Based on the Negotiations Style of the Other Party
Part of preparing for a negotiation is to anticipate the strategics and tactics of your counterparty and build a playbook to optimize your tactics based on their tendencies.
Here are a couple of situations for doing just that.
| Situation | Example Prompt |
|---|---|
| You need to understand cultural negotiation norms before meeting with someone from a different country. | As a buyer, you are preparing to negotiate an agreement with a supplier based in [Brazil]. What are some of the cultural norms typical of [Brazilian] business professionals? List these in a table format along with recommendations for aligning with these cultural norms. |
| You need to predict the negotiation approach of your counterparty based on their past behaviors. | As a buyer, you are preparing to negotiate with a [salesperson] who has been [active and friendly] in the past, and you would describe them as [outgoing and persuasive]. What negotiation approach would you expect from them? What negotiation strategies would you use? |
Identify What Your Counterparty is Likely to Find Important for a Specific Negotiation
An important part of negotiation prep is identifying issues that are high value to your counterparty and low value to you, that can be offered in exchange for issues that are high value to you and low value to them.
Here are a couple of situations where chatbots can help.
| Situation | Example Prompt |
|---|---|
| You are preparing to negotiate pricing terms with a long-time supplier and want to identify what they are likely to find important. | As a buyer, you are negotiating pricing with a long-time [stamping supplier]. Your company currently uses [three] additional stamping suppliers, and you are investigating adding others to achieve cost goals. You are meeting with this supplier prior to conducting a market test in the hope that you will be able to negotiate a contract with them that guarantees no price increases for two years, other than index-based price changes for materials. What will your counterparty likely find important in this negotiation? |
| You want to identify what suppliers seeking price increases will find important other than price. | You are a buyer for a manufacturing company and several suppliers are proposing cost increases due to their increased labor and energy costs. Your goal is to defer any price increases for 1 year while keeping a good relationship with these suppliers. What factors will your counterparty likely find important other than price? |
These ten situations illustrate just how versatile chatbots like ChatGPT, Copilot, and Gemini can be supporting purchasing professionals preparing for a specific negotiation.
Check out APD’s AI Chatbots for Purchasing short course to explore 150% applications of chatbots for common purchasing tasks (including another 15 for negotiations).
Prefer the AI Chatbots for Purchasing short course in Spanish? Click here to learn more.
APD offers a wide range of insightful resources, including expert-led training, on-demand webinars, and blogs on leveraging AI for purchasing!
Interested in more blogs, on-demand webinars, and more resources on Procurement Negotiations?