Good contracting starts with defining the best form of relationship to achieve the desired business results. Since 'the relationship' will often continue well beyond contract signature, it is essential that the parties include governance principles. Negotiators should think in three phases - first, relationship models; second, contracting models; and third, communication models. Traditional Procurement and sourcing processes focus on price, rather than value. They are built on assumptions that 'suppliers take advantage of us'. Many suppliers, on the other hand, feel that customers are 'confused about what they really want'. This stand-off frequently results in poorly established relationships and a failure to focus on 'value extraction'.
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