A Simple Guide on Contract Negotiation Process

As a global sourcing company, we expect to work with companies from different countries rather than exclusively working with a single country or nationality. Geographical locations, culture, and communication play huge roles in our working relationships which is why it is necessary for us to document our agreement in the form of a contract. Our contract negotiation process involves multiple factors along with terms and conditions which are tightly considered before a final contract gets signed. Here are a few factors to our contract negotiation process you need to know of.
Cost estimation is used to make the following products: Garments, Plastics, Electronics, and Branded/Logo Items.

 

Factors to a Contract Negotiation Process

1. Pricing

Pricing makes or breaks a contract negotiation process.
The most common reason why disagreement arises in the contract negotiation process is due to pricing. Most companies we come across right away go for the lowest production cost which is practical but wrongdoing. Always keep in mind quality comes with a price. If you go ultra-cheap then quality is surely sacrificed. The people we end up signing contracts with are usually reputable and the pricing towards their services are justifiable which is congruent to our goals in this company: provide quality service at a reasonable price.

2. Service Quality & Delivery Time

Service quality and delivery time are key factors in the contract negotiation process.
Quality of service and delivery time are very important components and are primary concerns for the terms and conditions during the contract negotiation process. You need to be assured of their service quality and they should promise to deliver on time. If both parties cannot meet on these factors, then a contract drafting is not happening any time soon. Also, you must hold a party liable in case they fall short of the standards set or be tardy in delivery time. This clause should be discussed clearly during the contract negotiation process.

3. Communication & Culture

Why communication and culture vital to the contract negotiation process?
There must be clear communication lines between our company and the suppliers or manufacturers we work with. We understand things could go wrong somewhere in the production and they could be inevitable. They must be honest with us so we can prepare our ad hoc processes to suppress the issue. If these issues are not communicated right away, then problems would reflect badly on our company and to them as well.

Understanding your potential business partner’s culture is important because even if work is constant, our approach and behavior towards it differ depending on our cultures. In our experience working with different nationalities, we modify our terms and conditions compliant with the other party’s culture and yet stick to our company’s standards. We just alter stuff within the contract negotiation process based on their working conditions and other factors revolving around their work culture.

Contract drafting will easily follow if the factors mentioned above are agreed upon by all parties involved and the contract negotiation process goes on smoothly. Your company’s terms and conditions should be set at a standard and applies to any contract negotiation process you offer your potential clients in the future. However, always be open to changes and possibly alter these items after the contract negotiation process not just for the benefit of your company but to your partners as well. This move will also make the contract negotiation process easier later in the future.
For more details specifically about what this service is; click here: Further reading on Contract Negotiations

Click here if you want to do a cost estimate on White Label products.
Click here if you want to do a cost estimate on Apparel.
Click here if you want to do a cost estimate on Electronics.



Click here if you want to do a cost estimate on Plastics.

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The Art of Prototype Manufacturing in OEM Companies

A basic overview of how we conduct prototyping for clients including the factors we consider before hiring suppliers and manufacturers capable of creating prototypes; it is a necessary process to screen suppliers and make sure we are both on the same page in terms of quality service.

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How Due Diligence Process Protects Our Company

A basic overview of how we conduct due diligence including all the important steps and legalities we take before finalizing partnerships; it is a necessary process to screen people we work with and make sure they are legal to operate.

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Overview of Sourcing and Procurement in an Integrated Supply Chain

A basic overview of how we conduct sourcing and procurement in our company; it is a necessary process to screen suppliers and make sure they are able to manufacture products according to our client's preferences and also live up to our quality standards by providing samples of their work.

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How to Look for Suppliers: Simple Guide on Supplier Assessment

While we do feasibility study reports for our clients to determine whether the project they are trying to invest on is most likely to succeed; our services are not just limited to it, as we are more than willing to cater to them beyond feasibility studies such as conducting supplier assessment. In this article, we will focus on a vital process known as supplier assessment procedure.

When manufacturing/production companies are bound to operate, they need to have suppliers who will provide them with the materials they need to sell products to their possible customers. These suppliers are not hard to find since there are a lot of them in this industry. The only problem is you must execute the supplier assessment procedure properly, so you’d be able to tap suppliers which will be assets to your company and not become liabilities.

Most companies settle for the cheapest available supplier without weighing on other options revolving around the supplier selection process. It’s completely understandable pricing is a major factor in supplier assessment but focusing exclusively on this aspect is wrong because other factors get overlooked in the supplier assessment process. Here is our simple guide on how we do supplier assessment for our clients.

Supplier assessment is used to make the following products: Garments, Plastics, Electronics, and Branded/Logo Items.

 

Supplier Selection Criteria

1. Value for Money

This criterion is basic in our supplier assessment process. Instead of looking at cheap pricing, we weigh the services potential suppliers can provide based on quality, technology, and tools suppliers use to render services as part of supplier evaluation. By doing so, we are assured our clients get the most out of what they are paying for in their suppliers. At the same time, we stick to the budget set for suppliers and not go beyond to stick to the cost estimation process done beforehand.

2. Service Quality

Supplier assessment determines service quality. The quality of your supplier’s services should be attributed to their consistency in delivering the goods. They need to be on time according to the schedule both parties have agreed to. There is never a reason to be late in the world of business and it is a fact. The supplier assessment process verifies this part very well.

3. Reliability

Always keep in mind if suppliers are not reliable then this could right away reflect on to your company for being unreliable to your customers as well. For example, if you go to the department store to purchase something but is currently out of stock, you would not blame the supplier directly for such mishap but be pissed off at the store for the moment. Reliability is a major concern in our supplier assessment process.

4. Open Communication Lines

Suppliers need to be honest in case things go awry on their end. They must tell you if they will be late or if they are out of stocks so at least your company can prepare for a viable solution to your possible customers. You must think of your supplier as a tag-team to whatever it is you are doing and not simply another company working on your behalf. Honesty and open communication lines are must-haves in our supplier assessment procedure.

5. Credible Reputation

Supplier assessment also checks if a potential supplier is reputable in and around the industry you are in. They should have past and present clients who can speak positively on their behalf. Their good reputation should automatically say they have the characteristics you want from a supplier and this is a big plus for supplier assessment. Other factors to notify credible reputation in our supplier performance evaluation should be the track record, certifications, financial stability, media references, and brand marketing. These factors can be added as notes in the supplier assessment report.
The criteria listed above are what we look for in our supplier assessment process. There may be minor additions along the way but the four items mentioned are the main focus of our supplier assessment method.

For more details specifically about what this service is; click here: Further reading on Supplier Assessment

Click here if you want to assess suppliers for White Label products.
Click here if you want to assess suppliers for Apparel.
Click here if you want to assess suppliers for Electronics.



Click here if you want to assess suppliers for Plastics.

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Providing Viability of Solutions Thru Feasibility Study

An in-depth look at how to reduce lead time in a manufacturing/production setting. In this article, we will also get to know strategies for a more effective lead time management system and standard lead time analysis.

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