Save the above for your files. I consider this to be the basic terms and conditions associated with most Purchase Orders. It lists all the most common terms and conditions typically associated with most industrial buying organizations and their suppliers.
A contract between a buyer and supplier is often referred to as a Purchase Order (PO). The terms and conditions on that PO are often referred to as the Boilerplate. Boilerplate is kind of an old school term but a lot of old timers are still out there. Most employers would like you to understand the basic terms and conditions associated with a PO and I have provided those to you as an attachment. It is generally accepted that SCM types such as yourself lack legal skills and that is why most SCM organizations have to go to a corporate lawyer when tort (liability) issues arise. As you think about your graduate education goals, it might be worthwhile to consider pursuing a Juris Doctorate (J.D., a law degree). Very few SCM professionals have a legal background, let alone a law degree. I always say, any time you can bring a skill set into the workplace where demand exceeds supply, then that is going to command a premium in terms of pay and job security. Getting into Law School requires that you take the LSAT and most law programs are 3 years in length. I personally think you would be very well served if you graduated with a supply chain degree and then eventually obtained a JD with a concentration in contract management.
As supply chain students, we require that our students take LAW 4860 so that you can learn the basic terms and conditions associated with buyer-supplier contracts. The instructors tend to be actual lawyers and they customize the class for ISM students. If that class appeals to you, then we can sit down and discuss your potential aspirations of obtaining a JD. I would also save this email for your LAW 4860 class (along with all the material in this class).
50% of the World’s Lawyers are American!
This all translates into a cost of doing business in America that could have consequences to our productivity (assuming tort/liability/lawsuits does not add value). Note, Americans are only 4% of the global population.
https://lnkd.in/gn5wpJpw
https://lnkd.in/gnxbSRTG
https://lnkd.in/gWhwkb-i
https://lnkd.in/g9W9sjUc
The Bad Actors of OEM Procurement.
“When sending out a request for quote (RFQ), original equipment manufacturers have the option of soliciting bids either on individual parts or parts packages as a whole. This latter practice is often referred to as bundling, and its purpose is to incentivize suppliers to quote in the most competitive manner since they can sense a significant amount of business is at stake. This practice, in itself, is not procurement malpractice.” For rest of read: https://lnkd.in/gy7DBU6U.
I used to pack Contract Management into one class during the 1990s. For PDF copy, see:
Now, we make our supply chain students take a customized legal & advanced contract management course. Our SCM students take LAW 4860 so that they can learn the terms & conditions associated with buyer-supplier contracts. The instructors are actual lawyers & they customize the class for SCM students. Note, today, according to World Commerce & Contracting, 70% of current supplier contracts have price increase provisions. https://lnkd.in/gNrUtNU5
We are teaching our students to look at raw material market data from multiple sources, visualize & analyze historical pricing scenarios, & simulate planned purchases & what-if scenarios against forward price curves. Why? Over ½ of our students go into Procurement.
Has “Strategic” Cost Management (i.e., Price Analysis) become a lost art? According to World Commerce & Contracting, 70% of current supplier agreements have price increase provisions: https://lnkd.in/g_ByzrNU.
Solutions such as the N-Alpha Materialx platform go beyond saving time and effort to manage spreadsheets to perform price indexing. They get the whole organization on the same page, allow companies to audit their indexing data, and forecast future indexing scenarios easily.
Stay tuned for our case study report – Some of our alumni are already testing and / or implementing automated business processes based on such tools, serving as the basis for addressing price indexing implementations (formulas, economic adjustments, etc.) by champions in a few larger orgs, and we’re following these implementations from an academic perspective. Please reach out if you would like to join the case study.
LAW 4860 – Marketing and Sales Law: The course examines the law as it applies to the sale of goods, warranties affecting such sales and the methods of financing those sales. Legal obligations imposed upon & risks assumed by the seller are emphasized.
FYI: a great discussion on ChatGPT browser extensions that reads Terms and Conditions and identifies non-standard items:
https://lnkd.in/gKJ6gXgK
https://lnkd.in/gt_9q-WM
Great post from Mr. Patrucco:
I will be sharing w/ my supply chain students. Is a law degree a good fit for supply chain managers? Trivia: > 50% of the World’s Lawyers are American (we are 4% of the global population)! Also: U.S. Tort Costs as a % of GDP: 2.40% (the avg for industrialized nations is .8%). We make our SCM students take an advanced contract mgmt class. Can you go to law school with a SCM degree and/or background? Yes, in fact, you might obtain a competitive advantage by doing so.
Law schools typically accept most degrees. It is helpful to get your undergrad in something related to the field of study (i.e., engineering degrees for patent law, business degrees for corporate law). Make sure you have a strong GPA & LSAT score.
POs & Advanced Contract Mgmt (now they expect you to be lawyers?!) Does a law degree make sense in SCM?
For a copy of my version of the basic terms/conditions in a SCM P.O., see: https://lnkd.in/eE25asK
A contract between a buyer & supplier is often referred to as a Purchase Order (PO). The terms & conditions on that PO are often referred to as the Boilerplate. Most employers would like you to understand the basic terms & conditions associated with a PO. It is generally accepted that SCM types such as yourself lack legal skills & that is why most SCM organizations have to go to a corporate lawyer when tort (liability) issues arise. As you think about your graduate education goals, it might be worthwhile to consider pursuing a Juris Doctorate (J.D., a law degree). Very few SCM professionals have a legal background, let alone a law degree. I always say, any time you can bring a skill set into the workplace where demand exceeds supply, then that is going to command a premium in terms of pay & job security. Getting into Law School requires that you take the LSAT & most law programs are 3 years in length. I personally think you would be very well served if you graduated with a supply chain degree and then eventually obtained a JD with a concentration in contract management per se.
As supply chain students, we require that our students take LAW 4860 (Adv Contract MGMT) so that they can learn the basic terms & conditions associated with buyer-supplier contracts. The instructors are actual lawyers & they customize the class for SCM students.
LAW 4860 – Marketing & Sales Law
The course examines the law as it applies to the sale of goods, warranties affecting such sales and the methods of financing those sales. Legal obligations imposed upon and risks assumed by the seller are emphasized.
Does the law part of business and/or SCM appeal to you? Remember, a huge part of your career will be creating long-term strategic relationships with suppliers. For example, how do you establish joint ownership of all design & mfg capabilities. That is a major reason why Negotiation is also the fastest growing class in our program: https://lnkd.in/guTUcvdu
More material on how to respond to supplier price increases:
https://lnkd.in/g6Uxkuby
https://lnkd.in/ggknMbZM
https://lnkd.in/gTMCPGXv
https://lnkd.in/gC2THQWB
https://lnkd.in/gp5naJxE
https://lnkd.in/gGRaKtVK
https://lnkd.in/gMuhMNf6
https://lnkd.in/gQZ7HfWb
https://lnkd.in/gvCpr6T5
https://lnkd.in/gPVMbWd6
https://lnkd.in/g6qdMvcS
https://lnkd.in/gwFjDfx7
https://lnkd.in/g494sxYr
https://lnkd.in/g6Uxkuby
Price analysis is a subject that is often overlooked in supply chain education.
Reads…
How should companies use competitive bidding?
https://lnkd.in/gS9vCRQ6
Assume a supplier estimates the following costs on an RFQ
https://lnkd.in/gxFBz3_U
ROI and Your Core Competency (i.e., SCM?)
https://lnkd.in/euh2rFdU
To stay competitive, companies are forced to outsource commodities and focus on their core competency
https://lnkd.in/g-DHtt8X
The primary elements for sourcing a supply partner
https://lnkd.in/ga2xtDsi
What does it mean to be hollow? Sourcing Strategy matters!
https://lnkd.in/gHB-nzeJ
The most reprinted article in the Harvard Business Review: The “Core Competence” Article
https://lnkd.in/gDsHme-r
You have every legal right to say you want a “cost breakdown”
https://lnkd.in/gygd5bzs
Procurement 101: Explanation on Commodities
https://lnkd.in/g_nEgvhJ
How do companies outsource strategically?
https://lnkd.in/gevbRKEq
POs & Advanced Contract Mgmt: https://lnkd.in/gcpHEEvw
How SCM managers “prepare” to negotiate price increases. https://lnkd.in/gVrdpuer
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Country/Tort Costs as a % of its total economy (GDP):
U.S. 2.40 (the average for other industrialized nations is .8%!!!)
Switzerland .70
France .55
Canada .55
Austria .53
Belgium .50
Germany .45
U.K. .45
Italy .45
Spain .35
Japan .35
Denmark .35
Australia .30
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Think of tort costs as liability and lawsuits. The Trial Lawyers of America are one of the most powerful lobbying powers in Washington. Most politicians have a J.D. (Juris Doctorate, a law degree). I suppose having quick and easy and kind of cheap access to lawyers is a good thing. Also, living in a litigious society keeps everyone on their toes for liability reasons so everyone has to practice due diligence (being proactive on liability issues). But, why would America’s tort costs be three times larger than the rest of the industrialized world? What % of the world’s lawyers are American?
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Does the law part of business and/or SCM appeal to you. Would you ever consider pursuing a law degree. Have you taken LAW 3800 yet. Did you like it. Remember, a huge part of your career will be creating long-term strategic relationships with suppliers (i.e., the automotive OEMs teaming up with smaller technology suppliers to bring autonomous vehicles to the market). Just imagine the legal terms and conditions of those contracts. For example, how do you establish joint ownership of all design and manufacturing capabilities. I hope they took Dr. Eckert’s MKGT 2750 Global Negotiation class. My goal professionally and personally is to never need to call a lawyer (so far, so good).
Thank you. Sime
Dr. Sime (Sheema) Curkovic, Ph.D., Professor, Operations/Supply Chain
Western Michigan University, Haworth College of Business
E-Mail: sime.curkovic@wmich.edu