by Rick Baker
On Aug 14, 2012
Manufacturing Sector Contracts: what you don't know...will hurt you.
What's bad - manufacturers in Ontario continue to leave money on the contract-table and accept the burden of a transfer of risks. We have seen evidence of this on many occasions.
What's worse - we've encountered a resistance to advice on how this problem can be remedied. Frequently, we have heard responses like "That's just the way it is" and "We can't do that in our industry".
What's worst - a good number of Ontario manufacturers are no longer in business, at least in part due to their refusal to accept contracting advice. Poor contracting practices - narrow-focused negotiation and industry-sector-biased negotiating - and failure to borrow better practices from other sectors has contributed to the reduction of the Ontario manufacturing sector.
Ontario can and will do better.
There's no question - many Ontario manufacturing companies can do a better job of negotiating major contracts.
Here are some bullet points to consider...an objective 3rd-party view on contracting:
- When you restrict your thinking to your industry sector, or even to industry in general, you leave money on the table or expose your company to extra risk
- When you do not know and have confidence in your differential advantage you are negotiating on weak legs
- When you believe you are negotiating from a position of weakness...then you are [so, terminate that thinking]
- Borrow brilliance and better negotiating practices from other industry sectors and from commercial sectors...seek out different perspectives
- When you approach RFPs with a limited-possibilities mindset you open the door to problems
- Major companies utilize a variety of people to explore and test contracting boundaries...not just company executives and [in-house and 3rd-party] lawyers and accountants
- Major companies combine thorough contracting processes with creative thinking processes
- It's time to get back into auto-sector work...but, this time use enhanced negotiating practices
What do you think?