Research Journal of Science & IT Management - RJSITM - The ...

the best interest of the company. Be thorough in your
investigation, seek input from all stakeholders and use the
following methodology to lead the team to a unified vendor
selection decision:
Preliminary Review of All Vendor Proposals
Record Business Requirements and Vendor
Requirements
Assign Importance Value for Each Requirement
Assign a Performance Value for Each Requirement
Calculate a Total Performance Score
Select a the Winning Vendor
1.5 Contract Negotiation Strategies: The final stage in the
vendor selection process is developing a contract negotiation
strategy. Remember, you want to "partner" with your vendor
and not "take them to the cleaners." Review your objectives
for your contract negotiation and plan for the negotiations
are covering the following items:
List Rank Your Priorities Along With Alternatives
Know the Difference Between What You Need and
What You Want
Know Your Bottom Line So You Know When to Walk
Away
Define Any Time Constraints and Benchmarks
Assess Potential Liabilities and Risks
Confidentiality, non-compete, dispute resolution,
changes in requirements
Do the Same for Your Vendor (i.e. Walk a Mile in
Their Shoes)
1.6 Contract Negotiation Mistakes: The smallest mistake
can kill an otherwise productive contract negotiation
process. Avoid the following ten contract negotiation
mistakes to protect jeopardizing an otherwise productive
contract negotiation process.
2. Ten Mistakes to Avoid In The Contract Negotiation
Process
These contract negotiation mistakes should be avoided so
that you and your vendor will come to an agreement that
will benefit both parties.
2.1 Thinking the Yard is fenced In: Don't assume that
only a certain subset of resources or conditions can be
negotiated. The sky is the limit and finding creative and
original alternatives that can benefit both parties will result
in a better negotiated contract. Do not propose ridiculous or
insulting alternatives that will destroy your sincerity and
integrity.
2.2 Failure to Study Your Opponent: Too many people
approach contract negotiation process with an egotistic
mentality. They fail to research the vendor that they will be
negotiating with. They don’t understand the vendor's market
and what other influences control their environment. The
larger the contract, the more time you should spend on this.
2.3 Too Aggressive: You need to be certain that your
company's interests are at the forefront of your priorities but
at the same time you need to be mindful and sensitive
regarding the person representing the vendor. Aggressive
discussions will only succeed in raising the vendor’s
defensive mechanisms and negotiations will turn out to be
fruitless.
2.4 It's All About Price: Of course nobody wants to pay
too much for their goods and services, but there is a lot more
on the table than just money. Look for alternatives that are
high on your priority list and low on the vendors. Then you
both win.
2.5 Jumping Too Quick: No matter how low the opening
price is, offer lower or ask for something more. If you jump
too quickly at the first offer, the vendor will feel like they
made a stupid mistake.
2.6 Don't Gloat: When you do end up striking a fantastic
deal in your favor, don't embarrass the vendor by saying
something that will give you an ego-trip at his/her expense.
Not only is this unprofessional, but the vendor may then
look for loop-holes in the contract to regain some money
and pride.
2.7 Terminology Not Defined or Understood: Don't
assume that everyone who will read the contract will
understand every technical term or complicated provision.
Insist that every area of the contract that has the possibility
of being misunderstood is clearly defined.
2.8 Inconsistencies within the Contract: Look for
inconsistencies within the contract that can come back to
haunt you in some form of arbitration. If necessary, have a
third party review the contract in order to uncover any
inconsistencies.
2.9 Concern in One Area Will be Overridden by Another
Area: Do not assume that a perceived weakness or
apprehension in one area of the contract can be compensated
by strength in another area. Be specific and direct in all
areas. Once the contract is contested in a court of law, all
control is removed from your hands.
2.10 Avoid Redundancies: Stating the same thing twice in
different section of the contract will not reinforce their
value. In most instances lawyers and the courts will come up
with a reason to differentiate and justify both areas; usually
with an interpretation that neither party anticipated.
II Methodology
3. Vendor Management Success Tips:
Strategies to Strengthen Vendor Relations
Vendor management allows you to build a relationship with
your suppliers and service providers that will strengthen
both businesses. Vendor management is not negotiating the
lowest price possible. Vendor management is constantly
working with your vendors to come to agreements that will
mutually benefit both companies.
3.1 Share Information and Priorities: The most important
success factor of vendor management is to share information
and priorities with your vendors. That does not mean that
you throw open the accounting books and give them user
IDs and passwords to your systems. Appropriate vendor
management practices provide only the necessary
information at the right time that will allow a vendor to
better service your needs. This may include limited forecast
www.theinternationaljournal.org > RJSITM: Volume: 01, Number: 08, June-2012 Page 30