The Infosys global supply chain management blog enables leaner supply chains through process and IT related interventions. Discuss the latest trends and solutions across the supply chain management landscape.

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Contract Negotiations - The Trust & Technology factors!!

If government policies dictate supply chains, Contracts are the essential glue that keeps the supply chains chugging. After-all, without a contract in place, no sane buyer and supplier is going to transact for long. For the past two months that I have been swamped in contracts - one recently signed with a client and the second one currently under intense negotiations with a product vendor - I have realized how painstaking the negotiation process can be; particularly when the stakes are high, when uncertainty prevails due to complexity of work and geographical barriers and when you do not have a past relationship.  


Not that I am a veteran at this stuff. Prior to this experience, I only flirted with this subject as a process consultant devising sourcing & contract processes. Nevertheless, I cannot help highlight the ironical role of Trust. Ironical because when you draft a contract, you do so keeping aside this "Trust" so that you can think of all possible eventualities and cover yourself for it. But when you negotiate, the speed of your negotiations is governed by the same Trust that you kept aside earlier. Over the past month, we - line managers and legal team from both the parties - have spent numerous hours in arriving at the elusive 'common ground'. We, expectedly made significant progress when the trust factor was high; and vice-versa, we haggled on the minutest of the clauses and debated on non-issues when the environment was devoid of it.


This is where the second 'T' i.e. Technology comes in (no, I am not referring to video-conferencing though it has its obvious benefits in eliminating geographical barriers). Having the entire drafting and negotiation process automated and transparent fosters a positive environment besides easing the process. I found that an application that identifies clearly proposed changes to the draft contract (using highlights), retains version history and tracks and identifies who makes the changes to be most vital during lengthy negotiations stretching over weeks (MS Word suffices for all features barring having a trail of the versions; but when you need contract compliance & automated renewals, you are better-off having a contract lifecycle management solution). This becomes all the more important when there are more than two parties involved in the contract and the positions of each need to be recorded unambiguously and made visible to the rest.  


Wrapping up, the singular factor that can hasten or stall contract negotiations is the perception each party has of the other. And Technology's underlying role in this other-wise game of human minds is, to say the least, invaluable.   

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