A Novel Procedure to Pursue Aspired Procurement Negotiation Outcomes Using a Combined MADM Model

Abstract

In the modern global economy, public and private organizations frequently procure goods and services from external suppliers. As such, negotiations are essential to reach procurement agreements and thus achieve organizational objectives and meet criteria in a timely and economically efficient manner. However, numerous relevant studies have revealed that suboptimal agreements frequently occur in procurement negotiation (PN) settings, which negatively affect the realization of business objectives and criteria. This study proposes the addition of a novel procedure that integrates a combined multiple attribute decision-making (MADM) model into the PN framework to identify, measure, and depict suboptimal situations in the context of an influential network relation map (INRM). This approach enables visualized and systematic information to be continuously provided, thus helping to determine possible improvement initiatives for transitioning suboptimal agreements to aspired levels. A real numerical case study is used to demonstrate the practical application of the proposed procedure. The results reveal that by employing the combined MADM model, the proposed procedure can provide managers with a practical foundation for early identification of the critical factors/dimensions for continuous improvement of a negotiated agreement regardless of how or why a suboptimal agreement initially occurs.