Supply Excellence — Contract Negotiations: When YES is not enough

Contract Negotiations: When YES is not enough

April 14th, 2008 · by Ken Miklos · No Comments · contract management, events, supply management

I spent most of last week at the annual IACCM Americas conference in Scottsdale. The “Collaborate to Innovate” theme was a great way to frame the discussions, which included globalization, risk management, organizational delivery models, and the impacts of automation and technology on contracting and contract negotiation methodologies. Lots of networking, best practices, success stories and of course…cautionary tales. But the speaker who really grabbed my attention and sparked a lot of discussions was Danny Ertel, the co-author of The Point of the Deal: How to negotiate when YES is not enough.

Danny raised some interesting points based on the premise that the very approach most of us bring to contract negotiations hinders innovation - a goal of most organizations. He argued that measuring negotiators by “what did you get?” and “how little did you have to give up?” results in contractual terms and conditions that are not conducive to problem solving and innovation.

Instead, if successful implementation is truly the goal, he recommended six guiding principles to think about in negotiations:

The Deal is a Means to an End - If innovation is a goal, we need to reconsider restrictive terms and SLAs. Alternatively, we should be focused on objectives, sharing of information, and how we can get there with our trading partners. While it is a reality for many on the sell-side, closing the deal as quickly as possible is not an option that will maximize success.
Broader Consultation Means Better Implementation - Too often, naysayers who are critical to implementation success are excluded from negotiation. Obviously there are limits, but when deciding who to include (and exclude) in negotiations, consider both those that are critical in negotiation decision making as well as those critical to implementation.
Making a First Impression - Negotiation is the first, best example of how you will deal with your trading partner. It creates a precedent for how implementation and the ongoing relationship will take place.
Airing Nightmares Can Strengthen Relationships - We often attempt to hide past failures in fear that we’ll scare off business. Instead, think systematically about the risks that matter and discuss as openly as possible that which will improve the chances of success this time around.
Don’t Negotiate Over-Aggressively - There is no point in getting your trading partners to over commit. It won’t make them, or you, successful. The goal should be a true win-win that benefits both sides.
Define the Finish Line - Too often, organizations look at closing a deal as the end. Emerging best practices make transition to the implementation team part of the negotiator’s role. Some organizations are now having joint debriefing meetings with negotiators and implementation teams to this end. This better facilitates collaboration and success, and gives negotiators and implementers a better understanding of the other’s challenges, which will help everyone be successful.

Good food for contracting thought.

Ken Miklos is a Senior Product Marketing Manager for Ariba’s Visibility and Contract solutions.

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