Can a Negotiation Support System Help a Purchasing Manager

IN BRIEF The computer has become a useful tool for purchasing managers in administering contracts and in daily operations. Additionally, computer support for contract negotiations may also be provided. This article investigates the use of a computerized Negotiation Support System, or NSS, as an aid to a purchasing manager, and to the sales manager with whom he or she is dealing, in a typical industrial buying/selling negotiation. After reviewing the results of three prior studies using students subjects, the article reports on an empirical study - using purchasing managers as subjects - designed to test the effectiveness of an early version of an NSS. In this laboratory test of the NSS, the managers arrived at better contracts (higher joint outcomes and more balanced contracts) in less time when provided with the NSS. From the results of the study and the comments of NSS users, a number of implications for practicing purchasing managers are identified. The article concludes with suggestions about which organizations should develop an NSS and how they should begin the development effort. Today's purchasing manager relies on a wide variety of computer-based tools that can be classified in three groups: (1) Specialized applications to support the purchasing function, such as supplier and product databases, inventory control programs, and purchasing document preparation and record-keeping programs; (2) General purpose applications, such as electronic mail and electronic calendaring; (3) A variety of customized personal computer applications, often based on spreadsheet or database packages. Is it possible that a computer tool can provide significant assistance to a purchasing manager, and to the sales manager with whom he or she is dealing, in a typical industrial buying/selling negotiation? Such a computer tool exists in experimental form and has been named a Negotiation Support System, or NSS. This article reports on an empirical study - using purchasing managers as subjects - designed to test the effectiveness of an early version of an NSS. Negotiation is an important activity for most managers, and especially for purchasing managers. Resolving conflict is said to occupy 20 percent of a manager's working hours.[1] The importance of negotiation, coupled with the increasing complexity of the issues to be resolved, makes the possibility of computer enhancement for negotiations appealing. Rudimentary implementations of computer support in the business world, international affairs, labor law, and environmental and safety disputes have demonstrated the potential of an NSS for making negotiation problems more manageable and comprehensible for negotiators.(*) But these prior studies have generally employed a very limited NSS and have been lacking in empirical rigor, or else they have employed student subjects. Research is needed, with managerial subjects, to determine how and under what circumstances negotiation processes can in fact be enhanced by NSS support. This study investigates the effects of a computerized NSS on the outcomes of face-to-face issues resolution and on the attitudes of negotiators in an industrial buying/selling situation, using practicing purchasing managers as subjects in a laboratory experiment. Further, the article reports on the implications of these results for practicing purchasing managers. WHAT IS A NEGOTIATION SUPPORT SYSTEM? Negotiation support systems (NSSs) are a special category of group support systems (GSSs) designed to support the activities of two or more parties in a negotiation. A GSS is an information system which combines electronic communications, computers, and decision technology to support group work. An NSS is a subclass of GSS in which the parties being supported are attempting to negotiate or bargain to reach an agreement.[6] The core components of an NSS are an individual decision support system (DSS) for each party in the negotiation plus an electronic communication channel between the parties. …