july 15–16, 2004 hyatt regency long beach, ca © 2001 - 2005 maxelerate systems ltd. all rights...

NCMA Aerospace & Defense Contracting ConferenceUnderstanding and Preparing for a Changing Business Environment

July 15–16, 2004Hyatt RegencyLong Beach, CA

© 2001 - 2005 Maxelerate Systems Ltd. All Rights Reserved.

vNCMA 5th Annual Commercial Contract Management ConferenceMake the Connection: Your Customers, Suppliers, and Partners

October 17–18, 2005Renaissance Atlanta DowntownAtlanta, GA



Breakout Session # 1

Jon Maxim, President, Maxelerate

October 17, 2005

3:45 PM

Vendor Performance Management Getting What You Negotiated





The Balance of Negotiating Power

• Vulnerability• Skill Level• Responsibility• Tactical Advantage• Access• Incentive• On The Same Side• Timing• Organizational Profile• Who’s On First• Internal Process• Technical Advantage• Requirements





The Path to Agreement

• Win/Win?

• Zero Sum?

• Partnership?





The Negotiation Objective

• Getting to Yes?

• To Plead or Not To Plead?

• Fairness





The 4 Phases

Competitive Environment

Preparation

Management Negotiation





The VPM Process

Management

Manage The Contract

Optimize Vendor Performance

Direct Long-Term Relationship

Control Unmanageable Vendor





The VPM Journey

ControlUnmanageable

Vendor

DirectLong Term

Relationship


Manage The Contract

Manage the “Paper Trail”

Manage the money

Manage your assets

Manage changes





Manage The Contract

• Manage the “Paper Trail”– Contract content and event tracking

• Deliverables• Service level agreements• Events: Renewals, termination, price, etc.

– Vendor interaction documentation

Administer Contract





Manage The Contract

• Manage the money– End-to end payment administration– Remedy and reimbursement entitlement

Administer Contract





Manage The Contract

• Manage your assets– What is an asset?– Physical Assets– Intellectual Property

• Yours• Theirs

– NDA’s and Proprietary Information

Administer Contract





Manage The Contract

• Manage changes– Inevitability– Vendor vs. client view– Incorporate rolling estoppels– Change process

• Focal point• Response format• Timely disposition

Administer Contract





The VPM Journey


Track & Measure

Compare

Act!

Incent






• Track – Customer responsibilities– Vendor responsibilities

Enforce Compliance






• Measure– Aligned with contract

• SLA’s• Methodology

– Problem prevention

Enforce Compliance






• Compare– Vendors within categories– Executive communication

Enforce Compliance






• Act!– Feed Back Performance– Obtain Remedies– Vendor management automation tools

Enforce Compliance






Tier II

Tier I

Tier III

Preferred

Standard

Strategic





Incentives Management






The VPM Journey

Direct Long Term Relationship

Establish Correct Relationship

The True Strategic Supplier





Direct Long-Term Relationship

What a strategic supplier brings to the “relationship table”:

– Engages you in joint development– Their senior execs are assigned to you– Account teams have high knowledge level– Accountable for product performance– Leader in their industry– Committed to continuous improvement– Expectations custom built to your company– Create competitive advantage for you– Provides preferential pricing

The True Strategic Supplier





The VPM Journey





• The Contract

• The Marketplace

• The Relationship

• The Law

• Your Checkbook

Sources Of Leverage

Control Unmanageable Vendor





• Assign project manager• Form transfer team• Develop termination strategy• Gain executive sponsor approval• Select replacement supplier• Develop transition plan• Ramp up new supplier• De-ramp current supplier• Deplete inventories• Clear invoices• Inform clients• Communicate with current suppliers• Communicate with stakeholders and business units• Terminate supplier transactions

Termination Project PlanControl Unmanageable Vendor





5 Keys To Success

• Executive support

• Teaming stakeholders

• Classification of suppliers

• Measurement

• Rules of engagement





U.S.A.

1600 Golf Road, Suite 1200Rolling Meadows, IL 60008

Phone: (847) 483-5014Fax: (847) 483-5015e-mail:

[email protected]: www.maxelerate.com

Canada

29 Pennock CrescentMarkham, ON, L3R 3M5

Phone: (905) 305-0831Fax: (443) 586-2385e-mail:

[email protected]: www.maxelerate.com

july 15–16, 2004 hyatt regency long beach, ca © 2001 - 2005 maxelerate systems ltd. all rights...

Documents

maxelerate systems

conference understanding

changes slide

fairness slide

vpm process management

paper trail contract

ncma aerospace defense

partners breakout session