Future of Sourcing - Negotiation https://futureofsourcing.com/tags/negotiation en Best Practices for Contract Development and Negotiations https://futureofsourcing.com/best-practices-for-contract-development-and-negotiations <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Best%20Practices%20for%20Contract%20Development%20and%20Negotiations%20%281%29.png"><a href="https://futureofsourcing.com/sites/default/files/articles/Best%20Practices%20for%20Contract%20Development%20and%20Negotiations%20%281%29.png" title="Best Practices for Contract Development and Negotiations" class="colorbox" rel="gallery-node-2017-Zepn_PNLZZE"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Best%20Practices%20for%20Contract%20Development%20and%20Negotiations%20%281%29.png?itok=KkeNxMbt" width="624" height="325" alt="Best Practices for Contract Development and Negotiations" title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <h1>Best Practices for Contract Development and Negotiations</h1> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/advantages-of-artificial-intelligence-in-enterprise-contract-review-and-analysis">Advantages of Artificial Intelligence in Enterprise Contract Review and Analysis</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>With so many elements and technologies present in every vehicle on the road, the ecosystem behind the vehicles we drive is massive. Navigating the business side of the automotive and technology worlds requires partnerships, and deals are happening constantly behind the scenes as suppliers and OEMs align with the goal of creating the next big thing in the world of autonomous vehicles and vehicle technology.</p> <p>Here are some key best practices that can lead to successful, efficient negotiations to create partnerships, which are an essential element of long-lasting success for businesses across the entire automotive ecosystem, as well as other fields.</p> <h2>Know Your Goals Going In</h2> <p>With any contract, each side should enter negotiations with detailed thoughts and outlooks on what needs to be accomplished. Issues such as timeframe for work being completed, what exactly needs to be accomplished &mdash; and of course any dollar figures involved&mdash; will need to be resolved with any potential partner before moving forward with a partnership. To have the proper goals in mind, do research prior to negotiations to know where you have synergies and what each side can contribute to the partnership.</p> <h2>Be Prepared to Compromise</h2> <p>While you should enter a negotiation with your ultimate goals in mind, know that compromise may be needed, and determine your limits on how flexible you will be before beginning negotiations. It&rsquo;s also possible that some new information may surface during negotiations that will impact the level to which you are willing to adjust.</p> <h2>Customization</h2> <p>Being flexible and offering customizability is also important. To achieve a successful business relationship, there should be a focus on functionality and performance that meets customer requirements as detailed in their RFQ. Software customization and optimization should be offered to meet various customer requirements, and close attention must be paid to deliver performance that exceeds customer expectations.</p> <h2>Show Your Successes and Provide Data</h2> <p>When negotiating with major companies such as OEMs or Tier 1 suppliers, showing what is unique about your business and how you stand out from the competition is critical. Focus on what makes you stand out in your field of expertise. Tout key successes to earn trust with potential partners, such as number of published patents, and quick patent issuance time frames. Be specific and show data detailing results you have achieved in the past, and how those experiences can help lead to success in the new partnership.</p> <h2>Listen</h2> <p>Listening to your potential partner is equally as important as presenting them with information about your company. What you hear may change the course of the negotiations in a way you had not anticipated.</p> <h2>Mitigate Risks</h2> <p>Each side should create a checklist of key issues that need to be addressed during the negotiations, so no key topics are forgotten. And if the contract changes throughout the negotiations, keep track of all versions in case anything needs to revert.</p> <p>Do not leave any important aspects out of the contract, even if you think they are implied. This can only lead to complications. Cover your bases legally and ensure confidentiality. This attention to detail is essential so both parties are on the same page and there are no misunderstandings down the road.</p> <h2>Contract Templates and Established Language</h2> <p>One factor that can delay drafting and approval of contracts and partnerships is getting caught up in technical language and details, and any legal language that must be included to ensure privacy and confidentiality. To avoid these delays, this language can often be standardized, so it doesn&rsquo;t need to be rewritten for every contract. Any time saved by not thinking about this technical and legal language means more time to focus on establishing trust and a relationship with a potential partner.</p> <h2>Establish Workflow Process</h2> <p>Delays in contract review and approval can also come from not having an established workflow for contracts. For whomever needs to see the contract at each partner company &mdash;&nbsp;from legal to top management &mdash;&nbsp;there should be an established procedure for the order in which these approvals are completed, as well as how changes are made once feedback is received.</p> <p>Without a set process, there is a risk that bureaucracy could delay a contract from being completed. For some deals where there is less risk involved, the contract workflow can be simplified or even semi-automated to smooth out the process.</p> <h2>Renew or Expand Existing Contracts</h2> <p>Beyond bringing in new partners, it&rsquo;s important to recognize the importance of contract lifecycle management. It is critical that a business recognizes the status of existing contracts, maintains strong relationships with existing partners and looks into how the partnership can be expanded based on future opportunities.&nbsp;&nbsp;</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/negotiation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Negotiation</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/contract-development" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Contract Development</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/rfp" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">RFP</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Best Practices for Contract Development and Negotiations - Future of Sourcing" addthis:url="https://futureofsourcing.com/best-practices-for-contract-development-and-negotiations"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Thu, 01 Jul 2021 02:00:00 +0000 Sunny Lee 2017 at https://futureofsourcing.com https://futureofsourcing.com/best-practices-for-contract-development-and-negotiations#comments 3 Contract Negotiation Strategies to Reduce Supply Chain Risk https://futureofsourcing.com/3-contract-negotiation-strategies-to-reduce-supply-chain-risk <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/3%20Contract%20Negotiation%20Strategies%20to%20Reduce%20Supply%20Chain%20Risk.png"><a href="https://futureofsourcing.com/sites/default/files/articles/3%20Contract%20Negotiation%20Strategies%20to%20Reduce%20Supply%20Chain%20Risk.png" title="3 Contract Negotiation Strategies to Reduce Supply Chain Risk" class="colorbox" rel="gallery-node-1994-Zepn_PNLZZE"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/3%20Contract%20Negotiation%20Strategies%20to%20Reduce%20Supply%20Chain%20Risk.png?itok=Jp-1nNTc" width="624" height="325" alt="3 Contract Negotiation Strategies to Reduce Supply Chain Risk" title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <h1>3 Contract Negotiation Strategies to Reduce Supply Chain Risk</h1> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/5-tips-to-write-supply-chain-contracts-for-diverse-suppliers">5 Tips to Write Supply Chain Contracts for Diverse Suppliers</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>Businesses around the globe recognize that there is a new normal for supply chain risk management. The pandemic&rsquo;s impact on global supply chains exposed vulnerabilities, created opportunities, and made embedding resiliency and agility into supply chains non-negotiable.</p> <p>To weather future crises, supply chain leaders are placing procurement processes under a microscope. Your supply chain contracts should also be reviewed and, where possible, renegotiated to minimize risk. To do so, include provisions to help mitigate foreseeable and unforeseeable risks to your supply chain. Specifically, you should consider the following three provisions to reduce risk in your supply chain contracts.</p> <h2>1. Promote End-to-End Transparency Through Your Supply Chain Contracts</h2> <p>Supply chain transparency helps reduce risk in many ways. It can identify unethical or unsustainable practices in your supply chain, which may damage your reputation. Your efforts to increase awareness of pressure points in your supply chain and to reduce the impact of delays, disruptions, quality control issues, or financial instability of downstream suppliers are also bolstered by transparency.</p> <p>But with increased transparency comes increased monitoring. As such, transparency and monitoring requirements should be negotiated with flow-down provisions. These require your suppliers to bind their own suppliers and contractors to the same requirements.</p> <p>Including provisions that require your suppliers to provide transparency reporting helps reduce the burden of monitoring transparency within your supply chains. Here are some examples of such provisions:</p> <ul> <li>Auditing requirements that include provisions for appointing independent third-party auditors</li> <li>Documentation requirements that include an obligation for your suppliers to identify their suppliers, along with their suppliers&rsquo; industry certifications</li> <li>Review processes that facilitate the assessment of compliance with transparency standards, including penalty provisions that apply when those standards are not being met.</li> </ul> <p>You should also consider mandating in your contracts that your suppliers use advanced tracking technologies. These technologies facilitate a faster response to disruptions, whether they&rsquo;re due to the Suez Canal being blocked for six days or a global pandemic, and may help minimize the length of the disruption.</p> <h2>2. Mandate Diversity, Sustainability and Ethical Practices from Your Suppliers</h2> <p>Increasing diversity, sustainability and ethical responsibility along your supply chain will help mitigate the risk of reputational damage, litigation or compliance issues, as well as the associated financial impact. Your desire to introduce supplier standards, and the extent to which they will apply to any new procurement partners, should be negotiated as early as possible.</p> <p>Diverse suppliers provide unique opportunities to produce new solutions to overcome competition. Their smaller size can provide the advantage of being able to adapt more quickly to market changes and business fluctuations. Accordingly, <a href="https://futureofsourcing.com/5-tips-to-write-supply-chain-contracts-for-diverse-suppliers">d</a><a href="https://futureofsourcing.com/5-tips-to-write-supply-chain-contracts-for-diverse-suppliers" target="_blank">iverse supply chains are more agile, resilient and innovative.</a> Also, ethical sourcing is increasingly being mandated by governments that are enacting modern anti-slavery laws.</p> <p>Your supplier contracts should stipulate that suppliers must abide by your diversity, sustainability, and ethical standards and requirements, and that they must flow-down these standards and requirements to their suppliers (where possible). Existing supplier contracts can be updated with these standards and requirements through an addendum or in connection with a contract renewal.</p> <p>Citing authoritative reports about the financial benefits of diverse, sustainable and ethical sourcing is a key strategy that can assist with buy in when negotiating these provisions with your suppliers.</p> <h2>3. Strong Contract Termination Clauses are Essential</h2> <p>Strong contract termination clauses can help protect your company from suppliers&rsquo; poor performance by facilitating a fast and cost-effective exit from supplier contracts. This can free up resources for developing relationships with better performing suppliers more quickly.</p> <p>Your supplier contracts should clearly define a material breach. Depending on your particular circumstances and risk appetite, this could include any one, or more, of the following:</p> <ul> <li>Non-performance</li> <li>Delayed performance or payment</li> <li>Non-conformity with diversity, sustainability or ethical responsibility provisions</li> <li>Non-compliance with insurance requirements</li> <li>Bankruptcy or illiquidity</li> </ul> <h2>Beyond Your Contracts: Communication and Relationship Management are Key to Minimize Risk</h2> <p>If your supply chain contracts are the building blocks of your supplier relationships, communication is the mortar that keeps the relationship intact. Communication promotes trust, responsiveness, and a sense of shared responsibility that strengthens supplier relationships and business outcomes. So, while your supplier contracts can provide structure for your risk management processes, strong communication channels are just as important to help minimize risk in a crisis.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/contract-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Contract Management</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/negotiation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Negotiation</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/supplier-relationship-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">supplier relationship management</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="3 Contract Negotiation Strategies to Reduce Supply Chain Risk - Future of Sourcing" addthis:url="https://futureofsourcing.com/3-contract-negotiation-strategies-to-reduce-supply-chain-risk"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Sat, 29 May 2021 02:00:00 +0000 Hannah Genton 1994 at https://futureofsourcing.com https://futureofsourcing.com/3-contract-negotiation-strategies-to-reduce-supply-chain-risk#comments Understanding Outcome-Based Contracts https://futureofsourcing.com/understanding-outcome-based-contracts <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Outcome-Based-Contracts_Future-of-Sourcing.png"><a href="https://futureofsourcing.com/sites/default/files/articles/Outcome-Based-Contracts_Future-of-Sourcing.png" title="Outcome-Based Contracts is a joint endeavor that rests on the strength of the relationship and an honest, open sharing of information including risk and reward." class="colorbox" rel="gallery-node-1075-Zepn_PNLZZE"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Outcome-Based-Contracts_Future-of-Sourcing.png?itok=adYDCZ8j" width="624" height="325" alt="Outcome-Based Contracts is a joint endeavor that rests on the strength of the relationship and an honest, open sharing of information including risk and reward." title="" /></a></div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/leveraging-behavioral-data-in-negotiations">Leveraging Behavioral Data in Negotiations</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>It&rsquo;s easy to hear a buzz word in the industry and make assumptions. However, what happens when those assumptions prove incorrect? And what happens when those assumptions are the bedrock under which a sourcing contract is being shaped, priced and a customer/service provider relationship is developed?&nbsp;</p> <p>&nbsp;</p> <p style="text-align: right;"><em style="font-size: 13.008px;"><a href="https://sig.org/search/ Outcome-Based Contracting" target="_blank"><img alt=" A successful outcome-based contract involves good planning,<br /> a clear demand for innovation and cost savings, and a genuine alignment of interests." src=" https://futureofsourcing.com/sites/default/files/Outcome-based%20Contracts.png" style="width: 300px; height: 250px; float: right;" /></a></em></p> <h1>Outcome-Based Contracting</h1> <p>I&rsquo;ve heard it many times: &ldquo;I don&rsquo;t care how you do it &ndash; but we need the job done.&rdquo; This can be a dangerous mindset if seeking to embark on an outcome-based project. If the customer is stating this, they have missed the point of an outcome-based agreement and should re-think their approach.</p> <p>If a service provider is on the other side of the table hearing that statement, they should challenge the customer&rsquo;s strategy and determine whether the customer has fully comprehended the level of work and commitment associated with the outcome-based approach.&nbsp;</p> <p>Outcome-based contracting is not a tool by which customers can shift responsibility to their service providers and seek to avoid the effort and time associated with good governance and performance delivery. It is an operational model that requires a strong customer and service provider relationship, trust, and a genuine sharing of risk and reward.</p> <p align="center"><em><a href="https://www.sig.org/blog/sig-speaks-jeanette-nyden-commercial-contracts-expert-author" target="_blank"><span data-ccp-charstyle="Hyperlink"><span data-contrast="none" xml:lang="EN-US">&gt;&gt;Mastering Performance and Outcome-Based Contracts&lt;&lt;</span></span></a></em></p> <p><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}">If a customer misunderstands what outcome-based contracting is (and perhaps confuses it with output-based contracting as this statement suggests), the customer&rsquo;s expectations are already misaligned with the service provider&rsquo;s and what each party should be committing to.&nbsp;</span></span></p> <p><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}">Outcome-based models are by no means new to the sourcing world. But now, with a greater understanding and implementation of Artificial Intelligence (AI) at the customer side, they have grown again in popularity. We see a resurgence in customers demanding greater innovation and more cost-effective service, particularly in process-driven services such as finance and accounting.&nbsp;</span></span></p> <p><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}">But with the potential for misunderstanding and customers confusing output for outcome, will we start to see an increase in issues arising from outcome-based contracts?&nbsp;</span></span></p> <h1><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}">Strategic Planning for Outcome-Based Model</span></span></h1> <p><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}">A true outcome-based model requires a considerable amount of strategic planning from the customer before engaging with service providers. A customer needs to be capable of introspective analysis to understand, develop, and communicate its business values and strategic agenda. </span></span></p> <p><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}">However, this flow of information will need to go both ways as the parties will need to determine whether they share the same business values and approach on which to base the relationship. While trust will be of utmost importance, this flow of communication should be subject to early contractual commitments of confidentiality. </span></span></p> <p><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}">Both parties may want to share, at a high level, their business strategies and potentially confidential information about business projections and future aspirations. This should be done in a controlled and respectful manner, sharing only the information that will benefit the relationship, with the requisite protections in place.&nbsp;</span></span></p> <h1><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}">Securing Organizational Buy-In</span></span></h1> <p><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}">Ultimately both parties need &ldquo;buy-in&rdquo; from senior stakeholders and commitment from every level of the organization before a strong working relationship can be established. All levels of the customer organization have to want to work with a service provider as a strategic partner and see the benefit in the service provider, helping them achieve their organizational goals. </span></span></p> <p><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}">This is more than just the parties outlining and agreeing to specific contract outcomes. A well-developed and robust business case should be circulated to ensure that internal alignment. In turn, the service provider has to want to align its business with the customer and trust that the customer will commit to a true risk and reward model.&nbsp;</span></span></p> <p><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}">Each party will need to invest in the process at an early stage. The customer will need to have the right resources available for its internal analysis and baseline of existing services. Both parties will need their project teams to invest time and effort in deal structuring and seeking to exclude external factors that may impact the measurable outcomes that the service provider is remunerated upon. </span></span></p> <p><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}">Early investment of this type (on both sides) will be vital in demonstrating commitment to the process and a successful, working contract. The time spent in the early stages of development of core principles, agreed measures and conducting due diligence means that there is a significant level of work done before the parties reach contractual negotiation. </span></span></p> <p align="center"><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"><em><a href="https://www.sig.org/search/Outcome-Based%20Contracting" target="_blank"><span data-ccp-charstyle="Hyperlink"><span data-contrast="none" xml:lang="EN-US">&gt;&gt;Get more resources,&nbsp;research and data on Outcome-Based Contracting&lt;&lt;</span></span></a></em></span></span></p> <p><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}">If customers are not capable or cannot spare the resource to take on these tasks, they would do well to consider using a consultant who understands the complexities of an outcome-based approach. Someone who can assist with baselining the relevant existing services and create a true risk and reward program is critical.</span></span></span></span></p> <p><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}">Although not yet at the contracting phase, the work effort involved in this early stage of development should be documented and agreed to by the parties. In addition, the baselines from which the outcomes can be measured, the outcomes themselves and any risk factors that may adversely impact the service provider&rsquo;s efforts should also be agreed on and clearly documented. </span></span></span></span></p> <p><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}">Outcome measurements will involve negotiation and discussion between the parties. Each measurement should be capable of being objectively monitored rather than an internal metric understood by only one of the parties.&nbsp;</span></span></span></span></p> <h1><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}">Governance Structure for Outcome-Based Model</span></span></span></span></h1> <p><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}">Strong governance is critical in most (if not all) sourcing relationships, but it is even more important when working on an outcome-based model. Governance structures should be developed early in the relationship and be robust with the ability to flex over time in line with the relationship needs and both customer&rsquo;s and service provider&rsquo;s businesses. </span></span></span></span></p> <p><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}">It is of paramount importance that the parties &ndash; at all levels of the relationship &ndash; adhere to the agreed structure. Like with all sourcing models, if one party deviates from the model, the relationship is strained and trust is lost.&nbsp;</span></span></span></span></p> <p><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}">The parties will need to trust each other sufficiently to afford a greater level of transparency than is customary with other contractual models. If a party experiences changes in its interests, business strategies or demands, it is important that this information is shared in sufficient detail to allow the parties to address what changes may need to be made. </span></span></span></span></p> <p><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}">This information will also shed light on whether that should cause a re-baselining or a change in measurable business outcomes. These will be difficult to legislate for at the outset, but the contract should afford the parties sufficient flexibility to ensure the ongoing success for both parties.&nbsp;</span></span></span></span></p> <p><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}">Some may feel an outcome-based contract implies a greater level of understanding and a more sophisticated level of contracting between customer and service provider. However, more simplistically, it involves strategic planning, a clear demand from the customer for increased innovation and cost savings, and a genuine alignment of the service provider&#39;s and customer&rsquo;s interests. </span></span></span></span></p> <p><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"><span data-contrast="auto" xml:lang="EN-US"><span data-ccp-props="{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}">Outcome-based contracting is not suitable for all services. Still, for business processes, the model is a joint endeavor that rests on the strength of the relationship and an honest, open sharing of information including risk and reward.</span></span></span></span></p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/contracts" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Contracts</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/law" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Law</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/provider" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Provider</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/negotiation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Negotiation</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/governance" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Governance</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/outcome-based-contracts" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Outcome-Based Contracts</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/supplier-collaboration" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supplier Collaboration</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Understanding Outcome-Based Contracts - Future of Sourcing" addthis:url="https://futureofsourcing.com/understanding-outcome-based-contracts"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Thu, 06 Aug 2020 18:27:45 +0000 Megan Paul 1075 at https://futureofsourcing.com https://futureofsourcing.com/understanding-outcome-based-contracts#comments How Executives Achieve Alignment To Drive IT Deal Negotiations https://futureofsourcing.com/how-executives-achieve-alignment-to-drive-it-deal-negotiations <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Copy%20of%20FoS%20Header%20Images%20%2819%29.png"><a href="https://futureofsourcing.com/sites/default/files/articles/Copy%20of%20FoS%20Header%20Images%20%2819%29.png" title="IT Deal Negotiations" class="colorbox" rel="gallery-node-1736-Zepn_PNLZZE"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Copy%20of%20FoS%20Header%20Images%20%2819%29.png?itok=weWgaeX_" width="624" height="325" alt="IT Deal Negotiations" title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <p><em>We sat down with veteran IT deal maker and senior vendor management executive Purvee Kondal to discuss making more strategic IT deals. Excerpts of the conversation follow.</em></p> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/ai-is-ready-to-transform-procurement-but-is-procurement-ready-for-ai">AI is ready to transform procurement, but is procurement ready for AI?</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <h1>What&rsquo;s the biggest challenge in IT deal-making?</h1> <p>Understanding ownership of the process, and what role everyone is playing. This must be clear from the outset. Some organizations are not relationship-driven and rely on the top person, relegating the rest of the team to the sideline. This presents problems, because the team is only involved at the last minute, and by then, it&rsquo;s too late for them to be effective.</p> <p>Without a sustained focus on internal collaboration, your stakeholders will never know what a good deal looks like. One group might have a vested interest in a vendor, and one group might only want three things &ndash; like performance, scalability and speed.&nbsp; Another group might want to reduce cost. They do not see the big picture. It bears mentioning that the vendors themselves are stakeholders, too. When organizations don&rsquo;t have a consistent approach to deal-making, they don&rsquo;t know who or what to focus on.</p> <p>It all boils down to creating enterprise-level governance &ndash; a solid and repeatable process &ndash; before any deal starts. This process helps you take the pulse of the relationships and helps everyone understand their roles and responsibilities to achieve a common goal.</p> <h1>Who is or should be doing the IT deal-making?</h1> <p>The truth is that a lot of companies focus on asking the question if IT should do the deal-making, or if it&rsquo;s procurement, sourcing or VMO? The real answer is that it depends on your organizational setup as not everyone operates in the same manner, so it doesn&rsquo;t matter where it occurs.&nbsp; Ultimately, the recognition that it will require a strong partnership between a lot of people with various expertise to drive the right IT deal.</p> <h1>Which constituency &nbsp;&ndash; vendors or stakeholders &nbsp;&ndash; &nbsp;is more difficult to manage, and why?</h1> <p>Internal executives are harder to manage. But when there are clearly defined roles among IT, sourcing, finance and the business units, and those roles are clear to everyone else, there&rsquo;s fewer issues.&nbsp; I can&rsquo;t overstate how essential it is to have transparency of everyone&rsquo;s roles and responsibilities.&nbsp; Vendors need to clearly understand who they are dealing with. If you&rsquo;ve got a good governance process in place, you will treat all vendors in an equal manner.&nbsp; Then you can run a good RFP and prevent the vendors from trying to go around you. In other words, transparency among stakeholders begets transparency among vendors.</p> <p>Vendor management and negotiations become difficult when there&rsquo;s a sense of distributed ownership of the deal, but they tend to fall in line when they understand how your organization likes to do business.</p> <p>Vendors do not set out to railroad you. If you enable them to understand your organization&rsquo;s process, and approach deals as a partnership, you can focus them on your agenda. The transparency of both sides is needed.</p> <p>Once you know exactly what you can and cannot share with them, you can provide transparency &nbsp;&ndash; &nbsp;especially as changes arise &ndash; so they can clearly understand your needs and your processes.</p> <h1>What have you done to effectively improve stakeholder alignment in the organizations you&rsquo;ve worked for?</h1> <p>Building good relationships with my internal stakeholders and gaining their trust has allowed them to see me as a partner who adds value. I get them to value my function and my team&rsquo;s capabilities.&nbsp; This requires expertise &nbsp;&ndash; &nbsp;I need to know more than they know &ndash; but not too much more!</p> <p>IT spending and vendor management expertise is hard to come by and how you approach things is a balancing act. You need a value statement for the key stakeholders that helps them all &ndash; &nbsp;especially the key decision-makers &nbsp;&ndash; &nbsp;but understand what you bring to the table. Buying IT is not like buying desk fixtures for the organization. With IT spends, there&rsquo;s usually a disconnect. The CIO values different things than the technology or finance or operations stakeholder. You need a value statement that resolves this disconnect and addresses business needs.</p> <p>Building good relationships with vendors is equally important, because their success is my success, too. When they try to create multiple points of entry into the organization, they&rsquo;re just trying to find who&rsquo;s the most appropriate person to deal with.&nbsp; Sometimes they end up spinning their wheels on something that&rsquo;s only important to one person instead of staying focused on the big picture. This is preventable if you build good relationships based on trust and transparency.</p> <h1>What are the biggest challenges regarding vendor management?</h1> <p>The first one is incumbency. Changing vendors is hard to do and selecting a new one is not something anyone enters lightly. Because of this, it&rsquo;s important to have a process in place that ensures vendors continue to provide the right solution competitively and that there is an identifying mechanism and &nbsp;backup plan for when incumbents aren&rsquo;t optimal for your changing business needs.&nbsp; This calls for strong governance that improves transparency internally across the organization.</p> <p>I think governance rests on five pillars: risk, performance, relationships, financials and the contract.&nbsp; The big one for me is risk, in all different areas: operational, financial, security and market-driven. You can&rsquo;t manage every risk for every vendor all the time,; you&rsquo;ve got to prioritize, and with the right governance discipline, you can do it. If you fail to manage this, you will suffer incumbency indefinitely.</p> <p>The second challenge is the fact that a lot of the vendors focus on short-term sales. Many of these companies change sales reps like I change clothes, so they don&rsquo;t understand your long-term plans and get to know your business.&nbsp; They&rsquo;re in it from quarter to quarter. They are driven to make the quick sale rather than helping you create a long-term pipeline with a view of where things can go in the future.</p> <p>The third thing is that the vendor&rsquo;s staff is trained to go to highest level possible in the enterprise, and they divide and conquer. This makes for a lot of short-sighted transactions.</p> <p>These challenges can only be mitigated by internal alignment. One of the things I have heard time and again is misalignment usually comes from miscommunication and having disassociated goals.&nbsp; For executives, it means to be setting up their teams for success without their needing to be there.&nbsp; This is achieved by providing their teams with processes and tools that better facilitate transparency and collaboration. When internal stakeholders are working as partners and one unit with equal stakes in making the project successful, they co-direct the vendor instead of competing for lead status. Executive leaders too, must let their team play their roles and enable them to add value.</p> <p>Very often, a stakeholder will feel that an incumbent has worked well for a long time, and there&rsquo;s no need to work on transparency or the relationship. That&rsquo;s when the CIO has to move people around to evolve the relationship and revisit the subject of efficiencies.</p> <p>A final thought on incumbency complacency: vendors must demonstrate where they add value too, and they don&rsquo;t do always do a very good job here.</p> <h1>How can VMO teams help make a difference?</h1> <p>First and foremost, creating a line of trust with the business and IT team to help them see you as a value-added partner and not just red tape while still managing risk and compliance. It&rsquo;s a balancing act. However, through trust and collaboration, the function can take a seat at the table for being able to be a sounding board and provide an independent perspective on perception vs. reality of a situation. It always helps when you can provide a fresh point of view as the stakeholder may be buying a product or service infrequently. &ndash; They don&rsquo;t have a pulse on the market or how the vendor is operating across various activities in your organization. The biggest benefit is the current and considerable knowledge of what the market looks like today &ndash; not five years ago and their performance for your entire organization.</p> <p>They can provide a snapshot of the current market, identify the key levers in a given deal, and help the business achieve leverage with our suppliers. They are empowered and enabled to become an extension &ndash; a trusted partner &ndash; in the organizational strategic deal-making. They can validate the business or IT team decision-making and keep the organization from making some big mistakes.</p> <h1>How do you make sure your best practices are followed by overseas stakeholders in the organization?</h1> <p>The trick here is to educate our global colleagues, not preach at them. We strive to keep them informed of what we&rsquo;re doing and how we do things, so they feel involved. We keep them apprised of the deals we&rsquo;re making, and the specific deal points. We encourage them to get outside training, too, and give them access to conferences to help them understand the complicated vendors.</p> <p>We want them to have a sense that we&rsquo;re on the journey with them, so we have regular communication checkpoints and update them on large global deals that involve or impact them. It can be difficult because confidentiality is required and there can be information leaks. You have to have proper governance to do this successfully. There are also a lot of differences among cultures that must be learned.To get it right, your team makeup needs to include those that truly understand what needs to be considered, how to message and what&rsquo;s important to them. You need to use different styles and approaches, depending on where you&rsquo;re doing business.</p> <h1>In an earlier white paper (How to Build a VMO), you talk about how a strategic VMO &ldquo;oversees value creation &hellip; and prevents of value loss.&rdquo; Can you elaborate?</h1> <p>First and foremost, overseeing value creation includes understanding who your key stakeholders are in the deal, what&rsquo;s important to them and how they will measure success, aligning the stakeholders to the bigger picture and driving a deal that achieves the value that was desired. It&rsquo;s more than merely driving the process of the deal execution but rather contributing expertise and knowledge that brings value to the deal itself. Now, doing the deal &nbsp;is not good enough since once a deal is signed, there can be value leakage since vendors inevitably come in and try to build onto the contract.&nbsp; You need to practice strong contract management as part of the VMO to prevent this. This requires you to constantly look to the vendor to make your IT environment better if they want you to grow your business with them. Vendors can bring innovation &ndash; and you can structure your contract to require it.&nbsp; Good governance means the vendor is doing everything they can to earn your business.</p> <p>The CIO doesn&rsquo;t necessarily know everything that the VMO knows, such as how tough some vendors can be. They are focused on getting the most points of entry into and information out of your organization &ndash; they divide and conquer. This requires a disciplined focus on key supplier relationships and insistence on transparency. And it requires vigilance about internal alignment &ndash; again, stakeholder collaboration based on strong relationships, supported by a consistent process.</p> <p>It behooves the VMO to figure out how to make the vendor successful. This is challenging because lots of times, stakeholders show little interest in the vendor&rsquo;s perspective or success. Furthermore, once the sales team is gone, it&rsquo;s the vendor delivery team who comes in to make everything work. If the relationship is not strong and transparent, it can be disastrous for the delivery team. Now they have to learn your organization, but they don&rsquo;t have a good pulse on what was negotiated, or what was the mindset behind the deal. They&rsquo;re left holding the bag.</p> <p>For me, stakeholder alignment is the linchpin. It will prevent a deal from going sideways; it&rsquo;s fundamental to getting a good deal.</p> <h1>Where should a VMO sit and how can it demonstrate value?</h1> <p>Truthfully, any function should report to a leader where the value is understood and the efforts are recognized. If a function is constantly being asked to demonstrate the value of it, chances are that it&rsquo;s either not sitting in the right area. Alternatively perhaps the value statement is only process-focused and not outcome-focused. Or sometimes, organizational structure and roles aren&rsquo;t clearly defined, leading to multiple people with similar skillsets getting involved in the deal-making,creating ineffective deal-making scenario. Good and effective leaders are less concerned about where a function like VMO sits but rather focuses on how leveraging the talented pool of resources across the organization can create effective governance and win together.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/information-technology-it" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Information Technology (IT)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/negotiation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Negotiation</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/best-practices" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Best Practices</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/vendor-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Vendor Management</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="How Executives Achieve Alignment To Drive IT Deal Negotiations - Future of Sourcing" addthis:url="https://futureofsourcing.com/how-executives-achieve-alignment-to-drive-it-deal-negotiations"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Sun, 05 Apr 2020 22:20:20 +0000 Purvee Kondal 1736 at https://futureofsourcing.com https://futureofsourcing.com/how-executives-achieve-alignment-to-drive-it-deal-negotiations#comments How Relating is More Powerful than Competing https://futureofsourcing.com/how-relating-is-more-powerful-than-competing <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Relating_vs_Competing.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/Relating_vs_Competing.jpg" title="How Relating is More Powerful than Competing" class="colorbox" rel="gallery-node-1643-Zepn_PNLZZE"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Relating_vs_Competing.jpg?itok=eWDN0rR-" width="624" height="325" alt="How Relating is More Powerful than Competing" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <div>Traditionally, Procurement has been asked to compete in intense negotiations that drive the lowest price on contracts to receive the most favorable terms, whereas sales organizations are taught to fight back. Time and time again, Procurement and sales go through knock-out rounds. &nbsp;&nbsp;</div> <div>&nbsp;</div> <div>Contrast this to the expectation of Procurement professionals today and in the future, in which we are asked to build strategic value and become more relationship focused. While this shift might feel small to many, it is a significant change in skills, measurements and culture within most Procurement organizations. For example, the ultimate value that can be achieved with suppliers is not during the contract negotiation, it&rsquo;s through <a href="https://futureofsourcing.com/unleashing-supplier-value" target="_blank">building a relationship with the supplier to gain differentiated value</a>, including the best ideas, people and goal attainment. &nbsp;&nbsp;</div> <div>&nbsp;</div> <div>This shift in expectations begs the question of are we relating or are we competing? Applying this question when <a href="https://futureofsourcing.com/software-negotiations-stakeholder-alignment-and-leading-the-negotiation" target="_blank">working with stakeholders</a>, during supplier interactions or leading teams will be a reminder to become a more relationship-focused organization. Here are three ways you can relate rather than compete. &nbsp;</div> <div>&nbsp;</div> <div> <h2>In Conversation</h2> </div> <div>At a conference, a group of procurement professionals shares stories about themselves and their experiences. While one person in the group is telling a story about their best negotiation, everyone else is thinking about their own story to tell. As soon as one person finishes their story, another person tells theirs, and on and on it goes, with everyone competing for the best story. At this point, we are not relating, we are competing. Instead of listening, we are thinking about our own stories. This leaves the person who told the story unvalidated, underappreciated and feeling like no one was truly listening. &nbsp;&nbsp;</div> <div>&nbsp;</div> <div>Instead of immediately jumping into your own story, try asking a question of the person who just told theirs. This change in your approach will allow you to relate to them. To build strong relationships, the other party needs to feel appreciated. By asking a question and being curious of someone else&rsquo;s experience, you show that you are more interested in what that person has to say versus what you have to say. This is one small change in habit that will make a difference with all of your relationships. &nbsp;&nbsp;</div> <div>&nbsp;</div> <div> <h2>Across Silos</h2> </div> <div>Within any large organization, there are silos within teams, organizations and across processes. And while large technology companies claim their solutions break down silos, they still exist. The result of these technologies has almost amplified the silos, as now there is more visibility to where they exist. &nbsp; &nbsp;</div> <div>&nbsp;</div> <div>Silos are created due to competition, not poor communication between teams for resources, goal attainment and power. Within Procurement, these silos are particularly difficult with stakeholders and with up and downstream organizations like R&amp;D or Accounts Payable. To reduce competition and be more relatable, aligning goals is the first and most basic way to eliminate competition. If you are trying to achieve the same results, then you start sharing resources differently and have aligned power positions in the organization. &nbsp;&nbsp;</div> <div>For example, instead of only having a savings goal within Procurement, include each of your stakeholders to have the same goals so they can report to leadership on their progress toward the goal with Procurement&rsquo;s support. Additionally, spend time with stakeholders to truly understand their strategies and offer solutions and direction in support of their strategy. &nbsp;At the end of the day, taking a genuine interest in your stakeholders and supporting their goals will reduce the silo effect.&nbsp;</div> <div>&nbsp;</div> <div> <h2>With the Enemy</h2> </div> <div>Of course, suppliers are not the enemy, or have they been? Over the years within Procurement, suppliers have been noted as the ultimate team to beat. They are who we hold in check to make sure we get a fair price and terms, and the party we don&rsquo;t trust for one second during negotiations. &nbsp;&nbsp;</div> <div>&nbsp;</div> <div>In shifting from cost savings to value generation, suppliers need to take on a different role, which means Procurement needs to analyze how to better relate to them day in and day out. &nbsp;Relating can take the form or truly understanding what our suppliers are trying to accomplish compared to how that intersects with the business&rsquo; strategies. It could also take the form of asking how you can help them to succeed and taking a vested interest in doing such. Developing and mentoring your suppliers to achieve their highest performance is another form of relating instead of competing. &nbsp;</div> <div>&nbsp;</div> <div>At the end of the day, the future of Procurement is one centered on knowledge, relationships and value, which starts with simple behavioral changes that focus on relating instead of competing. These small but mighty changes will lead to differentiated value in the marketplace and an environment where Procurement&rsquo;s overall value is realized.</div> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/supplier-relationship-management-srm" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supplier Relationship Management (SRM)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/stakeholders" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Stakeholders</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/negotiation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Negotiation</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/contract-construction" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Contract Construction</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/procurement" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Procurement</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="How Relating is More Powerful than Competing - Future of Sourcing" addthis:url="https://futureofsourcing.com/how-relating-is-more-powerful-than-competing"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Fri, 29 Nov 2019 21:32:09 +0000 Amanda Prochaska 1643 at https://futureofsourcing.com https://futureofsourcing.com/how-relating-is-more-powerful-than-competing#comments Supplier Collaboration: Sharing Influence for Shared Success https://futureofsourcing.com/supplier-collaboration-sharing-influence-for-shared-success <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Supplier_Relationship_Mangement.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/Supplier_Relationship_Mangement.jpg" title="Supplier Collaboration: Sharing Influence for Shared Success " class="colorbox" rel="gallery-node-1641-Zepn_PNLZZE"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Supplier_Relationship_Mangement.jpg?itok=x1j2e6DS" width="624" height="325" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <div>Success is not about procurement getting the upper hand; in fact, it might be about giving it up! Such a statement could raise the eyebrows of people pursuing success. It&rsquo;s true that all corporate functions want more influence &mdash; but the secret lies in how they go about pursuing and leveraging that influence.&nbsp;</div> <div>&nbsp;</div> <div>For instance, for procurement managers to maximize the value from every contract, they must work with the best and most influential suppliers of every product and service &mdash; even if it means they can&rsquo;t always maintain the upper hand.&nbsp;</div> <div>&nbsp;</div> <div>Maybe it&rsquo;s time to tweak our thinking about procurement influence. The real-life experiences described in the following case study &mdash; and the ones you&rsquo;ll read in Part 2 &mdash; show that procurement teams need to learn three key lessons about influence before they can reach peak effectiveness and before strategic suppliers can exercise their own influence on behalf of buyers.&nbsp;</div> <div>&nbsp; <div> <h2>Case study 1 &mdash; Influence does not equal control.</h2> </div> <p>Sometimes procurement teams must give up control to increase the influence of their supply chain. As they move away from reacting to transactional business needs and toward building strategic influence, procurement needs to stop emphasizing control in supplier relationships. Traditionally, procurement has been most comfortable when they have near-total control over suppliers. If they work to maintain that condition, however, they artificially cap <a href="https://futureofsourcing.com/unleashing-supplier-value" target="_blank">supplier value creation</a>. To make sure procurement has control over the relationship, they believe they must select suppliers that are not too influential, not too successful or not able to challenge their customers directly.&nbsp;</p> <div>But contracts do not exist for procurement&rsquo;s benefit. If the best, most qualified supplier ends up having leverage over procurement, but they are able to create measurable value for the enterprise, then that is the right way to go.&nbsp;</div> <div>&nbsp;</div> <div>For example, consider the case of expanded insight that played out at  <a href="https://www.determine.com/case-studies/brunswick" target="_blank">Brunswick</a>, a world-leading provider of marine engines, pleasure boats, and fitness, bowling and billiards equipment. They implemented a centralized spend analysis solution to increase both visibility and control. They understood that if they limited the increase in visibility to internal eyes only, they would be shutting the door on half of the value they could potentially gain from their investment.&nbsp;</div> <div>&nbsp;</div> <div>With all of their business units&rsquo; demand and purchasing history combined into one cleansed data set, Brunswick&rsquo;s suppliers understood more clearly their diverse business requirements and aligned more accurately with future business strategy and direction. If the Brunswick procurement team had decided to block their suppliers from this visibility, procurement certainly would have monopolized the upper hand during discussions, but suppliers would have been blindly trying to offer additional value. By allowing the suppliers to become well informed about Brunswick&rsquo;s needs, suppliers became more influential, but they were also better positioned to deliver on the company&rsquo;s behalf &ndash; increasing procurement&rsquo;s influence internally and externally.&nbsp;</div> <div>&nbsp;</div> <div> <h2>Case Study 2 &mdash; Shows that supplier influence and value go hand in hand.</h2> </div> <div>Supplier influence has grown with the realization that supply chains are critical to competitive advantage. Smart suppliers capitalize on this realization and expect to wield as much influence as their potential value can allow and their ability to manage their own supply chain can tolerate.&nbsp;</div> <div>Suppliers that recognize the connection between value and influence will work to build both in parallel and will be driven to grow their market share through innovation, not straight leverage. These suppliers present key collaboration opportunities &ndash; and foster conditions where both procurement and suppliers can grow their influence at the same time.&nbsp;</div> <div>&nbsp;</div> <div>RCI Banque was willing to put their words into action when it came to empowering supplier influence. When they automated their purchasing activity via the procure-to-pay platform (P2P), they reduced the time spent paying supplier invoices and sped up supplier compensation. By paying their suppliers sooner, and making the whole process more transparent and predictable, they vastly improved their supplier relationships. Although giving up cash sooner might have seemed like it reduced RCI Banque&rsquo;s influence over their suppliers, it actually created an opportunity for them to become a customer of choice, receiving greater value-oriented investment from critical supply partners simply by leveraging automation to increase efficiency. People who hold the money may hold the power, but they are unlikely to have collaborative relationships with any of their suppliers &ndash; at least not for long.&nbsp;</div> <div>&nbsp;</div> <div> <h2>Case Study 3 &mdash; Demonstrates why you cannot automate collaboration.</h2> </div> <div>Technology can be your procurement team&rsquo;s best friend, but only if you use it to convert strategy into action &ndash; or collaboration into value &ndash; by freeing up the right resources to engage with the right suppliers on carefully selected opportunities.&nbsp;</div> <div>Most supplier relationships involve flexible, give-and-take of influence over the terms of the contract. As a result, procurement needs to increase their engagement to realize the total value of each agreement. This engagement must be direct, driven by an understanding of big picture enterprise objectives and be mutually beneficial.&nbsp;</div> <div>&nbsp;</div> <div><strong>The role of technology in such cases is twofold:&nbsp;</strong></div> <div>&nbsp;</div> <div style="margin-left: 40px;">1.) Procurement must carefully decide which supplier relationships merit a collaborative level of attention (based on market intelligence, spend data and related risk).&nbsp;</div> <div style="margin-left: 40px;">&nbsp;</div> <div style="margin-left: 40px;">2.) The majority of supplier relationships will need to be automated if procurement is to have the time to go strategically hands-on without increasing headcount.&nbsp;</div> <div>&nbsp;</div> <div>Value of influence is limited if it is not lasting! That is the lesson your procurement team will need to bring into supplier relationship management strategies. If your influence is sustainable, it will flex enough to survive the ups and downs that are inevitable over the life of a contract.&nbsp;</div> <div>Your willingness to be &ldquo;down&rdquo; in one situation creates the potential to be back &ldquo;up&rdquo; when circumstances change. Fighting for dominant influence shortens its tenure and does as much damage as good to procurement&rsquo;s results and relationships.&nbsp;</div> <div>&nbsp;</div> <div>Maintaining a big picture perspective increases the number of teams working in parallel to create unified value &ndash; procurement, stakeholders and suppliers &ndash; absolutely expanding the value, not dividing it.</div> </div> <p>&nbsp;</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/supplier-relations" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supplier Relations</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/supply-chain" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supply Chain</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/spend-analysis" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Spend Analysis</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/negotiation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Negotiation</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/collaboration" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Collaboration</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Supplier Collaboration: Sharing Influence for Shared Success - Future of Sourcing" addthis:url="https://futureofsourcing.com/supplier-collaboration-sharing-influence-for-shared-success"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Sun, 24 Nov 2019 18:33:56 +0000 Julien Nadaud 1641 at https://futureofsourcing.com https://futureofsourcing.com/supplier-collaboration-sharing-influence-for-shared-success#comments Team Conflict: The Good, Bad and the Ugly https://futureofsourcing.com/team-conflict-the-good-bad-and-the-ugly <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Academics_of_Sourcing_0.png"><a href="https://futureofsourcing.com/sites/default/files/articles/Academics_of_Sourcing_0.png" title="Team Conflict: The Good, Bad and the Ugly " class="colorbox" rel="gallery-node-1622-Zepn_PNLZZE"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Academics_of_Sourcing_0.png?itok=WJsOEaaA" width="624" height="325" alt="Team Conflict: The Good, Bad and the Ugly " title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <div>Teamwork is increasingly desired and a norm for organizations. But all too often there is conflict among team members. Some say any conflicts in teams are bad. Others might contend conflict can be a productive source for creative tension used to drive innovation.</div> <div>&nbsp;</div> <div>So, who is right?&nbsp;</div> <div>&nbsp;</div> <div>Professors Carsten K. W. De Dreu, and Laurie R. Weingart&rsquo;s <a href="http://web.mit.edu/curhan/www/docs/Articles/15341_Readings/Negotiation_and_Conflict_Management/De_Dreu_Weingart_Task-conflict_Meta-analysis.pdf" target="_blank">research</a>, &ldquo;Task Versus Relationship Conflict, Team Performance, and Team Member Satisfaction: A Meta-Analysis&rdquo; (Journal of Applied Psychology 2003, Vol. 88, No. 4, 741&ndash;749) sheds light into research around the pros and cons of team conflict. So just what is meta-analysis? Wikipedia defines it in layman&rsquo;s terms as a &ldquo;statistical analysis that combines the results of multiple scientific studies.&rdquo; A meta-analysis is often used when there are multiple scientific studies addressing the same question, with each individual study reporting measurements that are &ldquo;expected to have some degree of error.&rdquo;</div> <div>&nbsp;</div> <div>The goal of the professor&rsquo;s paper? To study the litany of various research reports on how conflict in teams impacts team performance to sort out who is right and who is wrong.</div> <div>&nbsp;</div> <div>De Dreu and Weingart explain the various research studies generally lump team conflict into two types: task conflict and relationship conflict. Examples of relationship conflict are conflicts about personal taste, political preferences, values and interpersonal style. Examples of task conflict include the distribution of resources, procedures and policies, and judgments and interpretation of facts.</div> <div>&nbsp;</div> <div>In recent years there has been a growing tendency in the academic studies and literature to assume that relationship conflict can hurt team a team&rsquo;s performance while task conflict can, under certain circumstances, be beneficial to team effectiveness. &nbsp;</div> <div>&nbsp;</div> <div>De Dreu&rsquo;s and Weingart&rsquo;s analysis across all of the research showed some studies reported strong positive correlations between task conflict and team performance, while others have found a negative correlation. However, while some studies had conflicting results, De Dreu and Weingart found the &ldquo;large majority&rdquo; of studies found a negative relationship between both task and relationship conflict and performance.&nbsp;</div> <div>&nbsp;</div> <div>So, does this mean all conflict should be avoided at all cost? &nbsp;The duo say their study &ldquo;should not be taken as conclusive evidence that conflict does not have a functional side to it or that conflict can never be positive.&rdquo; They continue:&nbsp;</div> <div>&nbsp;</div> <div style="margin-left: 40px;">&ldquo;Conflict may have positive consequences under very specific circumstances, and we need to detect those circumstances in new research. While waiting for these studies, however, it seems safe to stop assuming that, whereas relationship conflict is detrimental to team performance, task conflict improves team performance. Clearly, it does not.&rdquo;</div> <div>&nbsp;</div> <div>Some of you might be saying, &ldquo;Yeah &ndash; I get conflict is bad. But really should we always avoid conflict?&rdquo; No one wants a room full of grinning yes-people that can stifle ideas or prevent bad things from happening. Remember, it was a yes-people attitude that led to the cabin fire disaster early in NASA&rsquo;s Apollo program that killed four astronauts in 1967.&nbsp;</div> <div>&nbsp;</div> <div>The point is not that you should disagree or keep closed-lipped, but rather how you work through issues in a healthy way. For those that follow our research and work at the University of Tennessee on the Vested sourcing business model, you will know I am a fan of purposely creating a positive team dynamic between a strategic buyer-supplier through the use of a <a href="https://www.futureofsourcing.com/why-standard-contract-terms-can-be-bad-for-you" target="_blank">formal relational contract</a> that embeds social norms as guiding principles into the parties&rsquo; contract. This &ndash; coupled with formal governance structures on how to work through issues &ndash; can help buyer-supplier teams get past conflict in a healthy way. I outline this approach in the <a href="https://hbr.org/2019/09/a-new-approach-to-contracts" target="_blank">September-October issue of Harvard Business Review</a>, &ldquo;A New Approach to Contracts.&rdquo;</div> <div>&nbsp;</div> <div>While a <a href="https://www.futureofsourcing.com/stewart-macaulay-pioneer-for-relational-contracting" target="_blank">well-structured relational contract</a> can work wonders, I would be burying my head in the sand if I said simply creating a formal relational contract is a panacea. But the guiding principles and governance structures can prevent much of the conflict that would normally cause tension in a team. &nbsp;</div> <div>&nbsp;</div> <div>I will go on record saying that in some cases however, you must have the courage to proactively drive conflict. Yes &ndash; that is right. I said it. Sometimes you must have a hard stance and if that means conflict &ndash; it means conflict. But this should only be done when individuals are not following the guiding principles and are causing tension and disruption within the broader team. This is why I often say &ldquo;change the people or change the people.&rdquo; &nbsp;If you have a toxic team member &ndash; that person should go.&nbsp;</div> <div>&nbsp;</div> <div>Back to De Dreu and Weingart. Kudos to them for sorting through all of the research on this topic with their meta-analysis. One thing is for sure: It seems indisputable that conflict within teams and relationships can negatively affect performance. For those interested in learning how to create formal relational contracts I encourage you to register for the University of Tennessee&rsquo;s <a href="https://www.vestedway.com/2-day-collaborative-contracting-course/" target="_blank">Collaborative Contracting</a> course.</div> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/contract" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Contract</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/negotiation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Negotiation</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/vested-model" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Vested Model</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/kate-vitasek" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Kate Vitasek</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/collaboration" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Collaboration</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/team-work" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Team Work</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Team Conflict: The Good, Bad and the Ugly - Future of Sourcing" addthis:url="https://futureofsourcing.com/team-conflict-the-good-bad-and-the-ugly"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Tue, 22 Oct 2019 00:57:22 +0000 Kate Vitasek 1622 at https://futureofsourcing.com https://futureofsourcing.com/team-conflict-the-good-bad-and-the-ugly#comments Is it time for an eSourcing solution functionality reality check? https://futureofsourcing.com/is-it-time-for-an-esourcing-solution-functionality-reality-check <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/eSourcing_options.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/eSourcing_options.jpg" title="Is it time for an eSourcing solution functionality reality check? " class="colorbox" rel="gallery-node-1594-Zepn_PNLZZE"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/eSourcing_options.jpg?itok=Mj5rGwy1" width="624" height="325" alt="Is it time for an eSourcing solution functionality reality check? " title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <p>Forget the bells and whistles, focus on the features that your procurement team needs to get the job done.</p> </div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <div>As a rule of thumb, there is a list of 10 questions that every procurement team should ask at all solution provider demos. Some of them you&rsquo;d probably expect, like questions about integration and the administration of configuration settings. Others you might not have thought of, for instance asking to what degree the company &ldquo;takes their own medicine&rdquo; by using the technology themselves.&nbsp;</div> <div>&nbsp;</div> <div>This list of questions is based on experience in two specific roles: first as a procurement practitioner on a team tasked with selecting and implementing an eSourcing suite; and second, as a consultant at a procurement solution provider where the team was often called to participate in the sales process.&nbsp;</div> <div>&nbsp;</div> <div>It is safe to assume that most procurement professionals haven&rsquo;t had the experience of being on the sales side of a bid process in their current role. It is most interesting when your company wins the deal. Obviously, winning is more fun than not winning, but that&rsquo;s not it. When you go from prospect to partner, you get the opportunity to reflect on the selection process in the context of the priorities and maturity of your newly won customer.&nbsp;</div> <div>&nbsp;</div> <div>There are three areas of solution functionality that everyone demands, but which at least 90% of companies were not prepared to use.&nbsp;</div> <div>&nbsp;</div> <div> <h2>Optimization</h2> </div> <div>Companies regularly collect more information from suppliers than they absolutely need because this provides them with options. In theory, the more qualified options procurement has to present to the business, the more value they can create. Optimization automates the process of 1) calculating the cost and 2) ranking the value of different supplier proposals. Here&rsquo;s the thing &ndash; in order to benefit from optimization, you need to know all of the award constraints and be able to enter them in the system.&nbsp;</div> <div>&nbsp;</div> <div>It is also hugely helpful if you can score/rank the qualitative benefits of each supplier. Without this, procurement will be left with a nice neat ranking of suppliers by price &ndash; one that does not align with the business&rsquo; view of the category at all. It is much harder to articulate the basis of potential award scenarios with the specificity required for a system to understand them than you might think.&nbsp;</div> <div>&nbsp;</div> <div> <h2>Data Points</h2> </div> <div>&ldquo;How many data points can your system handle per project?&rdquo; It&rsquo;s a question that any competent provider should be able to answer right away. You can think of this as items * spec fields * bid fields * suppliers. The number balloons quickly in certain kinds of projects, reaching tens of thousands of data points that pose a challenge to import/export, analysis and optimization.&nbsp;</div> <div>&nbsp;</div> <div>Perfect examples include sourcing events for location-based services (floor washing, grease trap cleaning) and LTL freight (because of the number of lanes and suppliers involved). While data point scale is absolutely essential for certain kinds of projects, they are not usually the norm. Too much focus on this type of detail may lead to the selection of an overly expensive, overly complex system that will be next to unusable in the vast majority of sourcing projects.&nbsp;</div> <div>&nbsp;</div> <div> <h2>Complex Bidding</h2> </div> <div>One of the primary reasons most companies have for implementing eSourcing is to get their procurement teams away from spreadsheets for bidding and analysis. Given that, it is amazing how many companies will select and implement an eSourcing platform, only to attach a spreadsheet in the bidding section and ask suppliers to input one final number in a single bid field while submitting all of the bid detail in the spreadsheet!&nbsp;</div> <div>&nbsp;</div> <div>If procurement isn&rsquo;t skilled in the fine art of cost modeling &ndash; and able to create a cost model that reflects the need for standardization across bids as well as the flexibility to allow suppliers to move &ndash; you honestly don&rsquo;t need anything more than the most basic bid field functionality.&nbsp;</div> <div>&nbsp;</div> <div>Not to violate professional standards and name names, there are plenty of companies out there who chide prospective suppliers for not having expansive functionality even when they are nowhere near ready to use it. There is absolutely no harm in asking about the development roadmap or making sure the technology will grow with procurement as their learning curve progresses.&nbsp;</div> <div>&nbsp;</div> <div>That said, you&rsquo;re doing your team and your company a disservice if you are focused on a provider&rsquo;s ability to get you to the moon, when you&rsquo;re still getting comfortable leaving your front yard. Instead, define the functionality required by 80% of your company&rsquo;s sourcing projects and pick the best solution for addressing those.&nbsp;</div> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/technology" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Technology</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/esourcing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">eSourcing</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/data" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Data</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/bidding" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Bidding</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/negotiation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Negotiation</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/optimization" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Optimization</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Is it time for an eSourcing solution functionality reality check? - Future of Sourcing" addthis:url="https://futureofsourcing.com/is-it-time-for-an-esourcing-solution-functionality-reality-check"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Thu, 03 Oct 2019 20:38:04 +0000 Julien Nadaud 1594 at https://futureofsourcing.com https://futureofsourcing.com/is-it-time-for-an-esourcing-solution-functionality-reality-check#comments Innovations in Talent Management: University of Tennessee https://futureofsourcing.com/innovations-in-talent-management-university-of-tennessee <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/FOS%20Header%20Image_Innovations%20in%20Talent%20Management_1.png"><a href="https://futureofsourcing.com/sites/default/files/articles/FOS%20Header%20Image_Innovations%20in%20Talent%20Management_1.png" title="Innovations in Talent Management: University of Tennessee" class="colorbox" rel="gallery-node-1613-Zepn_PNLZZE"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/FOS%20Header%20Image_Innovations%20in%20Talent%20Management_1.png?itok=aPMK4XfG" width="624" height="325" alt="Innovations in Talent Management: University of Tennessee" title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <p>This October, the&nbsp;<a href="https://futureofsourcingawards.com/?__hstc=215510152.344406f4865c40604cf6029be7e958e0.1543422516683.1570825790542.1570835886974.660&amp;__hssc=215510152.9.1570835886974&amp;__hsfp=847670889" target="_blank">Future of Sourcing Awards</a>&nbsp;will celebrate organizations and individuals that have shown innovation, leadership and transformation in categories that are critical to the sourcing industry. Interviews with the finalists provide helpful insight about their projects, the problem they sought to solve and the impact to their organizations. Gain insight into the award-winning research done by the University of Tennessee, that yielded successful supplier relationships ranging from Procter &amp; Gamble, Microsoft, McDonald&rsquo;s, and the US Department of Energy.&nbsp;</p> </div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <div> <h3><em>Can you outline why your team embarked on this project and the problem that needed to be solved?</em></h3> </div> <div>In 2003 the University of Tennessee (UT) began a research project funded by the U.S. Air Force to answer this question: &ldquo;Is there a better way to outsource?&rdquo; They studied some of the world&rsquo;s most successful supplier relationships to learn why some outsourcing deals were highly successful while others either failed to live up to their initial promise or simply failed outright. The research included successful (and often award winning) relationship ranging from Procter &amp; Gamble, Microsoft, McDonald&rsquo;s, and the US Department of Energy.&nbsp;</div> <div>&nbsp;</div> <div>&nbsp;</div> <div> <h3><em>How were things done originally and what was the inspiration to innovate the process?</em></h3> </div> <div>UT researchers saw common threads in those successful relationships. For example, all of the successful outsourcing relationships had a very different type of business relationship with their suppliers and service providers &ndash; relationships that transcended a traditional buy-sell transactional relationship to one based on a highly collaborative &ldquo;win-win&rdquo; relationship. &nbsp;These successful relationships worked jointly towards shared goals to drive innovation, create value, and reward success. They consciously laid the foundation of trust, most often with deep levels of transparency. Researchers described their observations as a &ldquo;Vested&rdquo; mind-set because of the true win-win nature of the relationships based on mutually defined desired outcomes. Simply put, a win for the buyer was a win for the service provider. The parties were vested in each other&rsquo;s success. Thus was the Vested business model born.&nbsp;</div> <div>&nbsp;</div> <div>&nbsp;</div> <div> <h3><em>What KPIs did you use to measure success for this project? (For example: performance, customer satisfaction, revenue, sales or relevant financial gains?)</em></h3> </div> <div>There were no KPIs in the traditional sense of that term &ndash; but rather a shared vision that guiding UT researchers and a small group of advocates for our work (which we referred to a mavens (inspired by the term out of the book The Tipping Point in how to get ideas to spread). Our metrics were really the progress we had against our shared vision and our desired outcomes centered on education, dissemination and ultimately implementation of the Vested methodology. Success would be when real organization began to get real results from applying the learnings of our research &ndash; changing the world one deal at a time. &nbsp;</div> <div>&nbsp;</div> <div>Our first major milestone was simply around dissemination of our research and started with the first Vested book published in 2010, <em>Vested Outsourcing: Five Rules That Will Transform Outsourcing</em>. Five more books followed, including <em>The Vested Outsourcing Manual (2010)</em>, basically the Vested textbook, and <em>Strategic Sourcing in the New Economy: Harnessing the Potential of Sourcing Business Models for Modern Procurement</em> <em>(2016)</em>. Other books explored real life case studies of Vested principles in action&ndash; <em>Vested: How P&amp;G, McDonald&rsquo;s and Microsoft are Redefining Winning Business Relationships (2012)</em> and the guiding principles that are the basis of <em>Vested in Getting to We: Negotiating Agreements for Highly Collaborative Relationships (2013)</em>. The UT research library also now includes 18 white papers and 18 case studies. (See <a href="https://www.vestedway.com/books/" target="_blank">The Vested website</a> for more information about the books and research library).&nbsp;</div> <div>&nbsp;</div> <div>In addition to those publications, UT has developed comprehensive courseware programs &ndash; both online and classroom &ndash; for the study and implementation of Vested ideas and agreements that change the mindset and landscape of how organizations outsource Those programs have grown exponentially: Today more than 350 companies have sent nearly 1600 people to study Vested in one or more UT courses offered in its Certified Deal Architect program. We have taught courses across the globe including South Africa and Saudi Arabia all with the emphasize to change the world one deal at a time through educating people on the art, science and practice of how to create and sustain highly collaborative business relationships. To date, 57 companies have employed the Vested methodology in an effort to improve their outsourcing relationships. &nbsp;&nbsp;</div> <div>&nbsp;</div> <div> <h3><em>How do you plan to ensure that the new model remains relevant and adapts to the future needs of the market?</em></h3> </div> <div>We are continuously revising, refining and improving the UT courses. The first Vested book is now in its second edition. We add new white papers and case studies to the UT library on a regular basis and are planning on two new Vested book in the near future. Contracting in the New Economy &nbsp;will be a sister book to Strategic Sourcing in the New Economy and is being written with lawyers and is targeted to the legal and commercial managers who write contracts. &nbsp;In addition, the National Institute of Public Procurement has asked us to write a public procurement edition of the book Strategic Sourcing in the New Economy. &nbsp;&nbsp;</div> <div>Our proudest moment is likely a seminal <a href="https://hbr.org/2019/09/a-new-approach-to-contracts" target="_blank">Harvard Business Review</a> article co-written by myself, David Frydlinger and the Nobel laureate Oliver Hart which was recently published, in the Sept/October edition of the HBR &ndash; which is disseminated to 10 million follows through their print and online magazine. &nbsp;As part of our collaboration with Oliver Hart, he has linked our work to hard core economics/math and will be published by the academic paper by the National Bureau of Economic Research on Sept 9. HBER is a non-profit organization with the purpose to disseminate sound economic research to policy makers. &nbsp;&nbsp;</div> <div>Lastly, we are having impact as more and more universities update their curriculum to include our work on Sourcing Business Models and the Vested sourcing business model. &nbsp;We are proud to say SIG was the first sourcing organization to adopt our teachings into their SIGU. &nbsp;Today, over two dozen universities have updated their sourcing curriculum and have professors that are teaching some (or a lot!) of aspects of our work.&nbsp;</div> <div>&nbsp;</div> <div> <h3><em>What advice do you have for those who may want to implement this innovative approach in their own organizations?</em></h3> </div> <div>Our advice is simple: If you are dissatisfied with your current contracting and procurement methods and want a better, more collaborative way of working with your most strategic partners, it is time to explore the Vested business model. We suggest you start by exploring the Vested website, including the <a href="https://www.vestedway.com/blog/" target="_blank">blog</a>, and reading the first Vested book. &nbsp;And of course for those wanting to simply get started to under how Vested fits in with the broader sourcing big picture &ndash; take the SIGU course which has embedded Sourcing Business Models into the core of their curriculum!&nbsp;</div> <div>&nbsp;</div> <div> <h3><em>What can you share that other companies can take as a &ldquo;lesson learned&rdquo; about talent management from your project?</em></h3> </div> <div>It is not so much about &ldquo;management&rdquo; as it is about finding the right people who are collaborative, open-minded and ready to learn and change. The big lesson is that this is a continuous process of education and refinement; Vested is a growing movement because it works for the twenty-first century.</div> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/supplier-relationship-management-srm" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supplier Relationship Management (SRM)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/vested" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">vested</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/negotiation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Negotiation</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/talent-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Talent Management</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/future-of-sourcing-awards" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Future of Sourcing Awards</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Innovations in Talent Management: University of Tennessee - Future of Sourcing" addthis:url="https://futureofsourcing.com/innovations-in-talent-management-university-of-tennessee"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Sun, 22 Sep 2019 00:50:54 +0000 Future of Sourcing Awards 1613 at https://futureofsourcing.com https://futureofsourcing.com/innovations-in-talent-management-university-of-tennessee#comments Sourcing Supernova Hall of Fame: Danny Ertel https://futureofsourcing.com/sourcing-supernova-hall-of-fame-danny-ertel <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Danny_FOS%20Individual%20Award_Interview%20Graphic.png"><a href="https://futureofsourcing.com/sites/default/files/articles/Danny_FOS%20Individual%20Award_Interview%20Graphic.png" title="Sourcing Supernova Hall of Fame: Danny Ertel" class="colorbox" rel="gallery-node-1616-Zepn_PNLZZE"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Danny_FOS%20Individual%20Award_Interview%20Graphic.png?itok=HwRLE8V8" width="624" height="325" alt="" title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <p>This October, the&nbsp;<a href="https://futureofsourcingawards.com/?__hstc=215510152.344406f4865c40604cf6029be7e958e0.1543422516683.1570984969656.1571003004265.664&amp;__hssc=215510152.2.1571003004265&amp;__hsfp=847670889" target="_blank">Future of Sourcing Awards</a>&nbsp;celebrated seasoned veterans whose thought leadership and innovative work in the sourcing field have made a transformative difference over the course of their career. Below, read about Sourcing Supernova Hall of Fame inductee Danny Ertel founding partner of Vantage Partners and an expert in negotiation, relationship management and organizational transformation.</p> </div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <div> <h3><em>How did you get into this field &ndash; was it purposeful or by accident?</em></h3> </div> <div>I guess there are two things that came together for me in sourcing: &nbsp;The first is negotiation, and my work at the Harvard Negotiation Project and since on what it takes for an organization to get more value across its broad portfolio of negotiations. &nbsp;The second is relationship management and remediation, by way of lots of work advising both buyers and sellers in large outsourcing arrangements. &nbsp; I&rsquo;ve learned from many clients and partners what it takes to negotiate and then manage effective relationships between two complex organizations. &nbsp; &nbsp;&nbsp;</div> <div>&nbsp;</div> <div> <h3><em>In what ways do you feel your professional contributions have influenced or transformed the industry? (This could be a new approach or methodology, the application of an existing technology in a completely new way, significant thought leadership or even a career of inspiring others.)</em></h3> </div> <div>Following on the theme above, I think the work I and others have done on how you develop negotiation strategy, how you prepare effectively, how you conduct a negotiation, and how you learn (and help others learn) has contributed to where we as an industry are today. &nbsp;My books (Getting Ready to Negotiate, with Roger Fisher and The Point of the Deal, with Mark Gordon) and articles in the Harvard Business Review and elsewhere, are widely read and quoted.&nbsp;</div> <div>Similarly, on the relationship management side, our team at Vantage conducted and published some of the earliest research on the value of effective governance and relationship management in outsourcing agreements and drove a number of industry efforts to improve how those relationships are managed. &nbsp;&nbsp;</div> <div>&nbsp;</div> <div> <h3><em>In your opinion, what are the biggest challenges facing the industry today and what should be done to solve them?</em></h3> </div> <div>Sourcing and procurement are facing huge challenges driven in large part by changes in: &nbsp;</div> <div>&nbsp;</div> <ul> <li>what the business needs from us (e.g., sourcing innovation, not just goods and services; leveraging suppliers to gain competitive advantage, not just reduce COGS; etc.), &nbsp;</li> <li>what can be cost-effectively outsourced and/or automated, and &nbsp;</li> <li>how we use data and AI to help us make better decisions. &nbsp;&nbsp;</li> </ul> <div>The industry is just starting to recognize the implications of those changes for the competencies we need in sourcing; valuing those competencies (and our people) sufficiently to invest in them is going to have to be front and center on every CPO&rsquo;s agenda. &nbsp;</div> <div>&nbsp;</div> <div> <h3><em>Looking at the whole of your career, what do you consider to be your greatest achievement? </em></h3> </div> <div>Over the course of about 30 years doing this, I&rsquo;ve had the privilege learn from and to work with some terrific people on really challenging problems, dealing with everything from remediating damaged partnerships to bring to market life-saving drugs, to reducing and ending armed conflicts. &nbsp; I had lots of help in every one of those situations, and what I am most proud of is contributing to building a team and a network of folks who can be thoughtful, collaborative, and adept at solving problems with others. &nbsp;</div> <div>&nbsp;</div> <div> <h3><em>What three words do you feel your colleagues and peers would use to describe you? </em></h3> </div> <div>&ldquo;Calm&rdquo; is easy to say.&nbsp;</div> <div>&ldquo;Insightful&rdquo; is maybe more aspirational on my part.&nbsp;</div> <div>&ldquo;Effective&rdquo; would be nice too.&nbsp;</div> <div>&nbsp;</div> <div> <h3><em>What advice do you have for those who are new to the profession or considering entering the industry?</em></h3> </div> <div>Sourcing has to become much more about solving problems with our suppliers than about squeezing them. &nbsp;Work with your stakeholders to define more ambitious problems to solve, and work with your suppliers to help them bring their full set of capabilities to the table. &nbsp;</div> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/negotiation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Negotiation</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/future-of-sourcing-awards" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Future of Sourcing Awards</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/sourcing-star" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Sourcing Star</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/procurement" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Procurement</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/stakeholders" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Stakeholders</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Sourcing Supernova Hall of Fame: Danny Ertel - Future of Sourcing" addthis:url="https://futureofsourcing.com/sourcing-supernova-hall-of-fame-danny-ertel"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Fri, 20 Sep 2019 21:47:06 +0000 Danny Ertel 1616 at https://futureofsourcing.com https://futureofsourcing.com/sourcing-supernova-hall-of-fame-danny-ertel#comments