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Deal Closed: How to Do Contract Negotiations in Manufacturing

Our contract negotiation techniques serve as a testament to our successful dealings all this time. Read on to learn the three main aspects we focus on contract negotiations.

Introduction

manufacturing solutions -contract negotiations 2

As a global sourcing company, we expect to work with companies from different countries rather than exclusively work 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 is also a process on its own and multiple factors (that influence terms and conditions) are tightly considered before a final contract gets signed.

Factors to a Contract Negotiation Process

  1. Pricing

The most common reason why disagreements arise in contract negotiations is pricing. Most companies we come across immediately go for the lowest production cost which is practical, but wrong. Always keep in mind quality comes with a price. If you go ultra-cheap, then quality will surely be sacrificed. The people we end up signing contracts with are usually reputable which means the pricing is often transparent and justifiable. In doing so, they provide high quality service at a reasonable price.

  1. Service Quality & Delivery Time

Quality of service and delivery time are very important components and are primary concerns for the terms and conditions within the contract. You need to be assured of both their service quality and punctuality. If both parties cannot meet these factors, then a contract drafting will not be recommended. Also, you must hold a party liable in case they fall short of the standards set within the contract guidelines (defect rates, delivery time).

  1. Communication & Culture

There must be clear communication lines between our company and the suppliers or manufacturers we work with. We understand things often go wrong on the first few production iterations so the factory must be honest, so we can effectively solve any ad hoc issues. 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. You can also check out this recent success story on contract dealings.


contract drafting is the main goal of a contract negotiation

Let Us Negotiate the Contract for You

The safety of your investment is our top priority and the contract negotiation phase is a vital part of our services. We pride ourselves on negotiating contract terms specific to our clients’ needs. Intrepid Sourcing’s understanding of Asian business culture and legal systems lets us negotiate business contracts which secures the best possible deal.

In China, businessmen usually don’t negotiate business contracts; instead, they use long-standing relationships that grow over time. Even when negotiating contract terms, contracts often lack the specificity desired by Western firms. Our employees are immersed in Chinese contract negotiation strategies which gives us an advantage when dealing with white label and OEM manufacturing suppliers. Similar examples apply to all Asian countries. With our aid, your company will be able to avoid production problems from misunderstanding to fraud.

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 is also a process on its own and multiple factors (that influence terms and conditions) are tightly considered before a final contract gets signed.

  • Save Time: Why spend time thinking of contract negotiation strategies? Choose a contract negotiation process with reliable outcomes. Our Intrepid Sourcing team helps negotiating contract terms which match your goals.
  • Transparent Protection: We believe in a transparent and flexible contract negotiation process. Our job is negotiating contract terms on your behalf. You and your product are included in all contract negotiation steps.
  • Legal Compliance: Our contract negotiation strategies and contract drafting techniques are country compliant. This means we negotiate business contracts legal in the country you want to manufacture.

The Contract Negotiation Process

Why it Matters

The topic of money always comes up early in production planning. That’s why contract negotiations are a so important to the manufacturing process. As a result, a variety of contract negotiation strategies exist. Anyone who has encountered a contract drafting process will know contract negotiations as long and drawn out. You can be confident your best interests will be protected at all times when we finalize contract terms.

We believe a successful negotiation should document three main aspects: your product details, the factory lead time, and the product pricing. Firstly, closely scrutinizing the product details during the contract drafting phase protects your interests. Secondly, checking the production timeline against what the factory estimates gives an accurate understanding of your schedule. Thirdly, getting the product costs in advance lets you create a clear budget.

Contract drafting will easily follow if the factors mentioned above are agreed upon by all parties involved. Your custom manufacturing company’s terms and conditions should be set at a standard and applies for all contracts you offer your potential clients. However, always be open to changes and possibly alter these items later not just to benefit your company but your partners, as well. This move will also make the contract negotiation process easier later in the future.

You can also check this simple guide on how to negotiate contracts during this pandemic.


Want to Combine Services?

Optimizing your costing structure is a smart business decision, but only when a proper approach is taken to your contract negotiation methodology. We help across every aspect of the product outsourcing process, ensuring that you have access to the best system that can handle what you require.

Each project requires customized attention. You can choose standard packages or go for a personal-driven solution. Make the best combination for your success and we will deliver it to you with great care!

See our Manufacturing Solutions

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