scott haynes, c.p.m. ozden bayazit, ph.d.€¦ · •south sound chapter..5 ... learning to play...

6
Inside This Issue •Service Contracts …….2 •Upcoming Events……..3 •Scholarships…………..3 •South Sound Chapter..5 • Business Survey……..5 •NW Purchasing Conference…………….5 NAPM-WW Supporting Purchasing & Supply Professionals Since 1921 As we are nearing the end of summer and you’re planning the last details of your Labor Day weekend, the NAPM-Western Washington committees are busy planning the details that will shape our 2007-2008 program year. Our goals this year will focus on offering a great selection of educational opportunities for our members coupled with Top 10 Errors in Drafting Service Contracts by Gerard R. Fernandez, C.P.M., Contracts Manager, Johnson Controls, Inc. Catching the assignment to write a contract for services can be daunting no matter how many contracts you have read or how many supply relationships you have managed. It’s a little like learning to play golf – there is no substitute for getting out there and doing it. However, it pays to have a knowledgeable and willing attorney to mentor you and proof- read your work. Writing contracts isn’t like improvements in the interfaces between the business side of our affiliate and our members. We will also be focusing on leadership training for our volunteers and for any members who would like to join us. As Jerry Baker said to me at our May dinner meeting this past year, one of the biggest benefits to volunteering for an organization like ours is the opportunity to practice and develop leadership skills in a relatively safe environment. I couldn’t agree more with that statement. We’re going to be mixing up our monthly educational programs a little bit, offering one or two lunch meetings and also trying out some great new venues for a change of scenery. Meetings and seminars will be held in Bellevue and in Seattle and we are also in the process of forming a South Sound Chapter of NAPM-WW which will offer educational and networking opportunities to those members living or working in the Tacoma, Olympia and Centralia areas. Be sure to watch for information about our upcoming events on our Heather Rai, C.P.M., NAPM-WW President, 2007-2008 . writing term papers or short stories. It’s an entirely different style of writing. Whereas writing for concision and understanding is central to the task, the ultimate goal of contract writing is to capture the agreed written instructions about how the buyer and seller will conduct a business relationship. What value will the buyer give in exchange for the value provided by the seller? Contracts spell out the negotiated obligations and rights of the two companies. Poorly drafted service contracts can create many problems – even disagreements. The seller thinks they are supposed to deliver one thing while the buyer thinks they are supposed to get something else. The buyer may have limited remedies if the supplier is in breach. And if push comes to shove, the supplier’s attorneys may find wide avenues for escape in a badly written contract. Here are the Top-10 errors that

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Page 1: Scott Haynes, C.P.M. Ozden Bayazit, Ph.D.€¦ · •South Sound Chapter..5 ... learning to play golf – there is no substitute for getting out there and ... customers and understand

Inside This Issue

•Service Contracts …….2

•Upcoming Events……..3

•Scholarships…………..3

•South Sound Chapter..5

• Business Survey……..5

•NW Purchasing

Conference…………….5

NAPM-WW Supporting Purchasing & Supply Professionals Since 1921

As we are nearing the end of summer and you’re planning the last details of your Labor Day weekend, the NAPM-Western Washington committees are busy planning the details that will shape our 2007-2008 program year. Our goals this year will focus on offering a great selection of educational opportunities for our members coupled with

Top 10 Errors in Drafting Service Contracts by Gerard R. Fernandez, C.P.M., Contracts Manager, Johnson Controls, Inc.

Catching the assignment to write a contract for services can be daunting no matter how many contracts you have read or how many supply relationships you have managed. It’s a little like learning to play golf – there is no substitute for getting out there and doing it. However, it pays to have a knowledgeable and willing attorney to mentor you and proof-read your work. Writing contracts isn’t like

improvements in the interfaces between the business side of our affiliate and our members. We will also be focusing on

leadership training for our volunteers and for any members who would like to join us. As Jerry Baker said to me at our May dinner meeting this past year, one of the biggest benefits to volunteering for an organization like ours is the opportunity to practice and develop leadership skills in a relatively safe environment. I couldn’t agree more with that statement. We’re going to be mixing up our monthly educational programs a little bit, offering one or two

lunch meetings and also trying out some great new venues for a change of scenery. Meetings and seminars will be held in Bellevue and in Seattle and we are also in the process of forming a South Sound Chapter of NAPM-WW which will offer educational and networking opportunities to those members living or working in the Tacoma, Olympia and Centralia areas. Be sure to watch for information about our upcoming events on our

Heather Rai, C.P.M., NAPM-WW President, 2007-2008

.

writing term papers or short stories. It’s an entirely different style of writing. Whereas writing for concision and understanding is central to the task, the ultimate goal of contract writing is to capture the agreed written instructions about how the buyer and seller will conduct a business relationship. What value will the buyer give in exchange for the value provided by the seller? Contracts spell out the negotiated obligations and

rights of the two companies. Poorly drafted service contracts can create many problems – even disagreements. The seller thinks they are supposed to deliver one thing while the buyer thinks they are supposed to get something else. The buyer may have limited remedies if the supplier is in breach. And if push comes to shove, the supplier’s attorneys may find wide avenues for escape in a badly written contract. Here are the Top-10 errors that

PRESIDENT& BOARD OF DIRECTORS CHAIR: Heather Haren Rai, C.P.M. IMMEDIATE PAST PRESIDENT: Gerard Fernandez, C.P.M. VICE PRESIDENT& BOARD OF DIRECTORS CHAIR:

Jodie Anderson, C.P.M.

TREASURER: Cynthia Trainer, C.P.M. SECRETARY: Nikoletta Tolias, C.P.M.

October 11, 2007

“Supplier Diversity;

Understanding the Value”

Speaker: Fernando

Hernandez, Microsoft

Office: 10900 NE 8

th St. Suite 900

Bellevue, WA 98004 Mail:

P.O. Box 917 Everett, WA 98206-0917

PHONE:

(425) 462-5762

FAX: (206) 770-6312

E-MAIL:

[email protected]

We’re on the Web!

See us at:

www.napmww.org

NAPM-WW 10900 NE 8

th St. Suite 900

Bellevue, WA 98004

Marc Elken, C.P.M. Scott Haynes, C.P.M. Ozden Bayazit, Ph.D. Bret Miller, C.P.M. Linda Green, C.P.M. Brent Frimodig Matt Dill

PROFESSIONAL

DEVELOPMENT COMMITTEE

CHAIR:

Marc Elken, C.P.M.

COMMUNICATIONS CHAIR

Ozden Bayazit, Ph.D.

BOARD OF DIRECTORS

Heather Haren Rai, C.P.M. Gerard Fernandez, C.P.M. Jodie Anderson, C.P.M. Cynthia Trainer, C.P.M Nikoletta Tolias, C.P.M. Svea Dagel, C.P.M.

October 11, 2007

"Global Sourcing: Where

in the World Are Our Suppliers?"

PRSRT STDAUTO

U.S. POSTAGE PAIDEVERGREEN

PRINTING

NAPM-WW10900 NE 8

th St. Suite 900

Bellevue, WA 98004

Page 2: Scott Haynes, C.P.M. Ozden Bayazit, Ph.D.€¦ · •South Sound Chapter..5 ... learning to play golf – there is no substitute for getting out there and ... customers and understand

“Poorly drafted service contracts

can create many problems –

even disagreements.”

supply management professionals should avoid when drafting service contracts. 1. Having no written contract. This is the cardinal sin of contract drafting. Aside from the fact that it is likely illegal to not have a contact in place, it is definitely risky. What if a service technician fails to wire an HVAC unit properly resulting in a fire which closes your corporate office for repairs? Or worse yet, what if someone is injured? Not having a contract in place means that there is no General Liability Insurance in place beyond the statutory limits, no provision for damages either for your HVAC unit or for your lost business. And there is no indemnification for your corporate officers if an injured party sues. 2. Drafting a contract that doesn’t meet your internal customer’s needs – that doesn’t deliver value to your customer. This is typically a project management problem. As contract managers, our first job is to listen to our internal customers and understand their needs. We should begin by asking the customer questions like: Where do you want the performance level to be a year from now? What is the benchmark for world class service in this area? How is the current supplier failing? What are the most important things you want from a supplier? Is cost more important to you than …say, having 24-hour response? Our primary job is to achieve the

best value for our customers. 3. Drafting business terms that do not address the current business processes of either the buyer or the seller. Flow-charting the order release to payment cycle with your supplier before writing the contract is wise. Firstly you will learn a lot about the supplier’s processes; but secondly you will avoid making unrealistic

Top 10 Errors in Drafting Service Contracts

assumptions about the supplier’s capabilities. 4. Cutting and pasting the supplier’s Statement-of-Work into the contract. The supplier’s rational interest is to do as little as possible and be paid as much as possible. The buyer’s rational interest is the opposite. The buyer’s typical goal is to get as much as possible from the supplier and pay as little as possible. Whereas cutting and pasting the supplier’s SOW into the contract will save time, it will likely not deliver the best value or create the most enforceable business terms. 5. Failing to anticipate and cover potential risk. It is human nature to avoid thinking about the worst things that can happen. We want to believe that if the unthinkable occurs, our counterpart will make the situation right. Snap out of it! Take the time to think through the absolute worst case scenarios. Write them down and make sure that each of them is covered by the contract. 6. Drafting vague or unenforceable terms. Time to dust-off the college grammar textbook and tune-up your English skills. You may want to pay particular attention to misplaced modifiers, dangling

participles and punctuation. Being vague whether intentional or not, can be costly. Ask a colleague to read through your work just to be sure that you are being precise. And don’t skimp on the use of the word “shall,” even if it sounds repetitious. (i.e., “Supplier shall…”) Better to sound repetitious than to write a vague or unenforceable term. 7. Failing to include a performance level or drafting a vague performance level. It is essential that the contract define not just what the service is but also what is the expected

result. Ok, so the contract reads: “Supplier shall provide temporary labor personnel for software development project.” That’s clear enough. But, how many temps? Do they need a specific level of proficiency or certification? How many hours are they expected to work each week? What is their expected output? When will they be complete? What are the specific deliverables? Avoid using terms like “reasonable best efforts” when drafting the performance level. It can render an otherwise good performance level term meaningless. For example: “Supplier shall make a reasonable best effort to deliver the final software code package on or before May 1

2007.”

8. Failing to include Key Performance Indicators or drafting vague KPI’s. Measuring service performance quality is often highly subjective. There are several important aspects of any well written KPI – what is the quantifiable metric for each performance level, who will measure them and how will each be measured. 9. Failing to have the contract reviewed by qualified legal counsel. Even if there are no changes to your contract’s boilerplate legal terms, it is wise to have the contract reviewed by your attorney. A good attorney will help you tighten-up your draft, anticipate risk, avoid including conflicting terms, avoid abusing legal jargon and help you become a better negotiator and drafter. 10. Failing to implement a contract or communicate the contract once it has been signed. Often contracts are just put into a file drawer and never read again, unless there is a problem. Contracts are about creating value. To get 100% of the value you negotiated and drafted it’s imperative that the contract be communicated and implemented appropriately.

Late last spring, the idea of forming a local Chapter to serve members in the southern reaches of the NAPM-WW region was raised as an alternative to dealing with the traffic encountered to attend the regular monthly meetings in Bellevue. Discussions with the Board of Directors over the summer have resulted in the concept of the South Sound Chapter of NAPM-WW becoming a reality. The plan is to provide monthly dinner meetings and professional development opportunities to members south of Seattle starting in January 2008.

You are cordially invited to join the NAPM-WW Manufacturing Business Survey Respondents group. Our Affiliate Survey results are eagerly awaited every month by noted economists and members of the local and national business press. The Survey has been called the best indicator of current economic activity available, and the National Survey is widely publicized, and has been known to move stock markets. Filling out the Survey form is quick and easy-it is e-

Members are invited to attend a kickoff/organizational meeting and open house on Tuesday, October 9, 2007 from 6:30 pm to 8:00 pm at the AmeriTel Inn in Olympia. The AmeriTel is located at 4520 Martin Way East just off I-5 at exit #109. Snacks will be available at 6:30 pm, with a short presentation starting at 7:00 pm. Members of the Western Washington Board of Directors will be there to help introduce the new Chapter. Please join us to learn more about the South Sound Chapter and what ISM has to offer you.

For more information please contact Steve Mahr in Centralia at (360) 330-8140 or Marylee Peters at (360) 330-2350. You may also inquire via email to [email protected].

mailed to you every month, and the results are kept completely confidential. You do not have to disclose any proprietary information-just whether aspects of your business are better, the same, or worse than last month. Please consider becoming a valued participant in the NAPM-WW Manufacturing Business Survey. For further information, please contact Business Survey Chair, Carol A. Kujawa, A.P.P. at

[email protected].

Pacific Northwest Purchasing Conference: NAPM-Idaho Southwest (Treasure Valley) and ISM Idaho (Pocatello) will host the 64th Annual Pacific Northwest Purchasing Conference, a regional conference of supply management professionals from the states of Alaska, Idaho, Oregon and Washington. Date: November 1-3, 2007 For details please check www.napm-isw.org

AmeriTel Inn, Olympia

“We are excited to invite

you to participate in the

Conference, which will be

held November 1st

through November 3rd at

Boise State University in

the Student Union

Building.”

Page 3: Scott Haynes, C.P.M. Ozden Bayazit, Ph.D.€¦ · •South Sound Chapter..5 ... learning to play golf – there is no substitute for getting out there and ... customers and understand

Fernando Hernandez, Supplier Diversity Director, Microsoft

For more info about our events, please check our website at www.napmww.org

October Dinner Meeting: Program: “Supplier Diversity: Understanding the Value”: Will focus on the business case for supplier diversity. Moving from the pure social value of "it's the right thing to do" to understanding your business health could depend on how well you support and develop relationships with Women, Minority and Veteran, etc. owned business in the years to come. Please join us to learn why the color of Supplier Diversity in the new millennium is green. Speaker: Fernando Hernandez: Fernando serves as Supplier

Elisabeth R. Shipman, C.P.M., A.P.P. 2007 NAPM-WW Scholarship Recipient Elisabeth Shipman has ten years of experience in purchasing and inventory management. Her experience ranges from manufacturing and construction, to retail and pharmaceuticals. She received her A.P.P. in 2004 and her C.P.M. in 2005. She received her Associate Degree in Business in 2007. She is currently enrolled at the

Diversity Director for Microsoft Corporation. In this position, Fernando drives Microsoft’s strategies to achieve their supplier diversity objectives. He is responsible for championing Microsoft’s Supplier Diversity outreach efforts, and serves as the leader of the Corporation’s national team of Supplier Diversity professionals. Fernando is an active speaker in professional and academic settings, and was honored in 2006 as one of the 100 most influential Hispanics in America by Hispanic Magazine. Date: October 11, 2007 Location: Bellevue Coast Hotel.

NAPM-WW/ISM Satellite

Seminar"Global Sourcing: Where

in the World Are Our

Suppliers?": For many

companies, sourcing

outside the United States

has become a way of life.

Other companies are trying

to decide whether they

should jump on the

bandwagon. What does it

cost? What can we gain by

sourcing offshore? What are

the risks? What challenges

are there with inventory and

logistics on a global scale?

Hear from supply managers

who have stepped into the

globalsourcing arena.

Date: October 11, 2007

University of Phoenix online in pursuit of her Bachelor of Science Degree in Business with a focus on Integrated Supply Chain and Operations Management. Upon completion of her degree, she intends to pursue her CPSM certification. She served as the NAPM-WW Communication Chair in 2004 and served on the NAPM-WW Board of Directors from 2004-2007. Upon receiving her CPSM certification, Elisabeth

plans to return to serving the association and acting as a mentor to others who are seeking their certification. Ken Morisawa 2007 NAPM-WW Scholarship Recipient Ken is studying for the Purchasing Management Certification of Proficiency at Shoreline Community College in Seattle, WA. He wants to become a purchasing or supply chain manager in the future. He believes that he

Page 4: Scott Haynes, C.P.M. Ozden Bayazit, Ph.D.€¦ · •South Sound Chapter..5 ... learning to play golf – there is no substitute for getting out there and ... customers and understand

can become a better employee by earning the purchasing management certificate and make significant contributions to his future employers in WA states, USA.

After gaining experiences in management in the United States, he wants to teach purchasing, using

The Board of Directors (BOD) is the governing body of NAPM-WW and

manages the affairs, funds, and property of the affiliate. The BOD consists

of five Officers and nine Directors, who are all regular members and elected by the affiliate.

The Officers include the President, Vice President, Treasurer, Secretary, and Immediate Past President,

and make up the Executive Committee.

Members of the Executive Committee serve a one-

year term, except the Treasurer, who serves a

two-year term. The Directors serve a three-

year term. The BOD meets on the first

Thursday of the month in Bellevue during the program year and a

majority of the BOD must be present to vote on issues requiring BOD

approval.

“Congratulations to our

2007 scholarship

recipients: Ken

Morisawa and Elisabeth

Shipman….”

“The NAPM-WW Board

of Directors (BOD)

consists of five Officers

and nine Directors, who

are all regular members

and elected by the

affiliate”

hisexperience and knowledge in business, to employee and newbuyers who use English as a second language. With a support of the NAPM-WW scholarship this time, he will continue to study harder on the purchasing management program to get the certificate. So he will be back to the

workforce withcompetitive

work condition.

For our 2008 scholarship opportunities, check our website at www.napmww.org

Aleksey V. Belov Ron Heinrichs

Kristin K. Wright Erin Roach Chad Adler

Denise Hahn Ken D. Philen

Jody Scott

In addition to listing current employment opportunities in supply management at our on-line Career Center

(http://www.napmww.org/CareerMain.asp) we also announce employment

opportunities at our monthly educational events.

Members are invited to bring their resumes to the monthly educational event and introduce themselves

to potential employers. We want to be sure that we are posting on our website

an up-to-date listing of employment opportunities and that employers have

access to the best employment candidates –

our members. Please ask your hiring manager or corporate recruiter contact our

affiliate’s Employment Chair, Matthew Dill at

206-915-0871 or [email protected].

Page 5: Scott Haynes, C.P.M. Ozden Bayazit, Ph.D.€¦ · •South Sound Chapter..5 ... learning to play golf – there is no substitute for getting out there and ... customers and understand

“Poorly drafted service contracts

can create many problems –

even disagreements.”

supply management professionals should avoid when drafting service contracts. 1. Having no written contract. This is the cardinal sin of contract drafting. Aside from the fact that it is likely illegal to not have a contact in place, it is definitely risky. What if a service technician fails to wire an HVAC unit properly resulting in a fire which closes your corporate office for repairs? Or worse yet, what if someone is injured? Not having a contract in place means that there is no General Liability Insurance in place beyond the statutory limits, no provision for damages either for your HVAC unit or for your lost business. And there is no indemnification for your corporate officers if an injured party sues. 2. Drafting a contract that doesn’t meet your internal customer’s needs – that doesn’t deliver value to your customer. This is typically a project management problem. As contract managers, our first job is to listen to our internal customers and understand their needs. We should begin by asking the customer questions like: Where do you want the performance level to be a year from now? What is the benchmark for world class service in this area? How is the current supplier failing? What are the most important things you want from a supplier? Is cost more important to you than …say, having 24-hour response? Our primary job is to achieve the

best value for our customers. 3. Drafting business terms that do not address the current business processes of either the buyer or the seller. Flow-charting the order release to payment cycle with your supplier before writing the contract is wise. Firstly you will learn a lot about the supplier’s processes; but secondly you will avoid making unrealistic

Top 10 Errors in Drafting Service Contracts

assumptions about the supplier’s capabilities. 4. Cutting and pasting the supplier’s Statement-of-Work into the contract. The supplier’s rational interest is to do as little as possible and be paid as much as possible. The buyer’s rational interest is the opposite. The buyer’s typical goal is to get as much as possible from the supplier and pay as little as possible. Whereas cutting and pasting the supplier’s SOW into the contract will save time, it will likely not deliver the best value or create the most enforceable business terms. 5. Failing to anticipate and cover potential risk. It is human nature to avoid thinking about the worst things that can happen. We want to believe that if the unthinkable occurs, our counterpart will make the situation right. Snap out of it! Take the time to think through the absolute worst case scenarios. Write them down and make sure that each of them is covered by the contract. 6. Drafting vague or unenforceable terms. Time to dust-off the college grammar textbook and tune-up your English skills. You may want to pay particular attention to misplaced modifiers, dangling

participles and punctuation. Being vague whether intentional or not, can be costly. Ask a colleague to read through your work just to be sure that you are being precise. And don’t skimp on the use of the word “shall,” even if it sounds repetitious. (i.e., “Supplier shall…”) Better to sound repetitious than to write a vague or unenforceable term. 7. Failing to include a performance level or drafting a vague performance level. It is essential that the contract define not just what the service is but also what is the expected

result. Ok, so the contract reads: “Supplier shall provide temporary labor personnel for software development project.” That’s clear enough. But, how many temps? Do they need a specific level of proficiency or certification? How many hours are they expected to work each week? What is their expected output? When will they be complete? What are the specific deliverables? Avoid using terms like “reasonable best efforts” when drafting the performance level. It can render an otherwise good performance level term meaningless. For example: “Supplier shall make a reasonable best effort to deliver the final software code package on or before May 1

2007.”

8. Failing to include Key Performance Indicators or drafting vague KPI’s. Measuring service performance quality is often highly subjective. There are several important aspects of any well written KPI – what is the quantifiable metric for each performance level, who will measure them and how will each be measured. 9. Failing to have the contract reviewed by qualified legal counsel. Even if there are no changes to your contract’s boilerplate legal terms, it is wise to have the contract reviewed by your attorney. A good attorney will help you tighten-up your draft, anticipate risk, avoid including conflicting terms, avoid abusing legal jargon and help you become a better negotiator and drafter. 10. Failing to implement a contract or communicate the contract once it has been signed. Often contracts are just put into a file drawer and never read again, unless there is a problem. Contracts are about creating value. To get 100% of the value you negotiated and drafted it’s imperative that the contract be communicated and implemented appropriately.

Late last spring, the idea of forming a local Chapter to serve members in the southern reaches of the NAPM-WW region was raised as an alternative to dealing with the traffic encountered to attend the regular monthly meetings in Bellevue. Discussions with the Board of Directors over the summer have resulted in the concept of the South Sound Chapter of NAPM-WW becoming a reality. The plan is to provide monthly dinner meetings and professional development opportunities to members south of Seattle starting in January 2008.

You are cordially invited to join the NAPM-WW Manufacturing Business Survey Respondents group. Our Affiliate Survey results are eagerly awaited every month by noted economists and members of the local and national business press. The Survey has been called the best indicator of current economic activity available, and the National Survey is widely publicized, and has been known to move stock markets. Filling out the Survey form is quick and easy-it is e-

Members are invited to attend a kickoff/organizational meeting and open house on Tuesday, October 9, 2007 from 6:30 pm to 8:00 pm at the AmeriTel Inn in Olympia. The AmeriTel is located at 4520 Martin Way East just off I-5 at exit #109. Snacks will be available at 6:30 pm, with a short presentation starting at 7:00 pm. Members of the Western Washington Board of Directors will be there to help introduce the new Chapter. Please join us to learn more about the South Sound Chapter and what ISM has to offer you.

For more information please contact Steve Mahr in Centralia at (360) 330-8140 or Marylee Peters at (360) 330-2350. You may also inquire via email to [email protected].

mailed to you every month, and the results are kept completely confidential. You do not have to disclose any proprietary information-just whether aspects of your business are better, the same, or worse than last month. Please consider becoming a valued participant in the NAPM-WW Manufacturing Business Survey. For further information, please contact Business Survey Chair, Carol A. Kujawa, A.P.P. at

[email protected].

Pacific Northwest Purchasing Conference: NAPM-Idaho Southwest (Treasure Valley) and ISM Idaho (Pocatello) will host the 64th Annual Pacific Northwest Purchasing Conference, a regional conference of supply management professionals from the states of Alaska, Idaho, Oregon and Washington. Date: November 1-3, 2007 For details please check www.napm-isw.org

AmeriTel Inn, Olympia

“We are excited to invite

you to participate in the

Conference, which will be

held November 1st

through November 3rd at

Boise State University in

the Student Union

Building.”

Page 6: Scott Haynes, C.P.M. Ozden Bayazit, Ph.D.€¦ · •South Sound Chapter..5 ... learning to play golf – there is no substitute for getting out there and ... customers and understand

Inside This Issue

•Service Contracts …….2

•Upcoming Events……..3

•Scholarships…………..3

•South Sound Chapter..5

• Business Survey……..5

•NW Purchasing

Conference…………….5

NAPM-WW Supporting Purchasing & Supply Professionals Since 1921

As we are nearing the end of summer and you’re planning the last details of your Labor Day weekend, the NAPM-Western Washington committees are busy planning the details that will shape our 2007-2008 program year. Our goals this year will focus on offering a great selection of educational opportunities for our members coupled with

Top 10 Errors in Drafting Service Contracts by Gerard R. Fernandez, C.P.M., Contracts Manager, Johnson Controls, Inc.

Catching the assignment to write a contract for services can be daunting no matter how many contracts you have read or how many supply relationships you have managed. It’s a little like learning to play golf – there is no substitute for getting out there and doing it. However, it pays to have a knowledgeable and willing attorney to mentor you and proof-read your work. Writing contracts isn’t like

improvements in the interfaces between the business side of our affiliate and our members. We will also be focusing on

leadership training for our volunteers and for any members who would like to join us. As Jerry Baker said to me at our May dinner meeting this past year, one of the biggest benefits to volunteering for an organization like ours is the opportunity to practice and develop leadership skills in a relatively safe environment. I couldn’t agree more with that statement. We’re going to be mixing up our monthly educational programs a little bit, offering one or two

lunch meetings and also trying out some great new venues for a change of scenery. Meetings and seminars will be held in Bellevue and in Seattle and we are also in the process of forming a South Sound Chapter of NAPM-WW which will offer educational and networking opportunities to those members living or working in the Tacoma, Olympia and Centralia areas. Be sure to watch for information about our upcoming events on our

Heather Rai, C.P.M., NAPM-WW President, 2007-2008

.

writing term papers or short stories. It’s an entirely different style of writing. Whereas writing for concision and understanding is central to the task, the ultimate goal of contract writing is to capture the agreed written instructions about how the buyer and seller will conduct a business relationship. What value will the buyer give in exchange for the value provided by the seller? Contracts spell out the negotiated obligations and

rights of the two companies. Poorly drafted service contracts can create many problems – even disagreements. The seller thinks they are supposed to deliver one thing while the buyer thinks they are supposed to get something else. The buyer may have limited remedies if the supplier is in breach. And if push comes to shove, the supplier’s attorneys may find wide avenues for escape in a badly written contract. Here are the Top-10 errors that

PRESIDENT& BOARD OF DIRECTORS CHAIR: Heather Haren Rai, C.P.M. IMMEDIATE PAST PRESIDENT: Gerard Fernandez, C.P.M. VICE PRESIDENT& BOARD OF DIRECTORS CHAIR:

Jodie Anderson, C.P.M.

TREASURER: Cynthia Trainer, C.P.M. SECRETARY: Nikoletta Tolias, C.P.M.

October 11, 2007

“Supplier Diversity;

Understanding the Value”

Speaker: Fernando

Hernandez, Microsoft

Office: 10900 NE 8

th St. Suite 900

Bellevue, WA 98004 Mail:

P.O. Box 917 Everett, WA 98206-0917

PHONE:

(425) 462-5762

FAX: (206) 770-6312

E-MAIL:

[email protected]

We’re on the Web!

See us at:

www.napmww.org

NAPM-WW 10900 NE 8

th St. Suite 900

Bellevue, WA 98004

Marc Elken, C.P.M. Scott Haynes, C.P.M. Ozden Bayazit, Ph.D. Bret Miller, C.P.M. Linda Green, C.P.M. Brent Frimodig Matt Dill

PROFESSIONAL

DEVELOPMENT COMMITTEE

CHAIR:

Marc Elken, C.P.M.

COMMUNICATIONS CHAIR

Ozden Bayazit, Ph.D.

BOARD OF DIRECTORS

Heather Haren Rai, C.P.M. Gerard Fernandez, C.P.M. Jodie Anderson, C.P.M. Cynthia Trainer, C.P.M Nikoletta Tolias, C.P.M. Svea Dagel, C.P.M.

October 11, 2007

"Global Sourcing: Where

in the World Are Our Suppliers?"

PRSRT STDAUTO

U.S. POSTAGE PAIDEVERGREEN

PRINTING

NAPM-WW10900 NE 8

th St. Suite 900

Bellevue, WA 98004