Seven wastes of negotiation: Difference between revisions

The [[Toyota Production System]] (TPS)  was created by Toyota’s chief engineer Taiichi Ohno to eliminate [[waste]], called “muda.” [[Waste]] — as opposed to ''cost'', is the enemy on any production line: a process that is expensive but necessary must add value<ref>If it costs more than the value it adds, consider why you are engaged in the process at all. You have a loser of a business.</ref> and you should be cool about paying a fair value for it. Processes which do ''not'' add value are intrinsically wasteful.  To eliminate waste, you have to know exactly what waste is and where it exists. Ohno categorised [[seven wastes|seven types of waste]] and for each one, suggested reduction strategies.

In a glorious bit of sympatico, the categories of waste cross over pretty well to the contract [[negotiation]] process, a fact which seems to have escaped every [[management consultant]] who has ever ruminated on the issue. A lot of them have.  

===Overproduction===

Simply put, overproduction is to manufacture an item before it is required, or where it is not eventually required. In the contract negotiation world, “manufacture” is [[sales]]-led and the negotiation process necessarily involves client interaction, so overproduction does not seem on point at first. But is it?

*The revenue accruing to a broker out of the contract generation process is not a function of generating that contract, but of trading under it. A {{tag|contract}} that is concluded but rarely or never traded under is an example of [[over-production]].

*Thus, generating agreements that don't get traded on is a form of over-production.

*This is generally a [[sales]] problem. It is not easy to fix as it involves predicting the future, but the costs can at least be allocated to sales (in the same way that revenue is!)

===Waiting===

Whenever goods are not moving or being processed, the waste of waiting occurs.  

*'''Drafts out to client''': The negotiation process requires client input. Waiting on that is wasteful and is largely outside our control? Largely but not entirely: the ''easier'' and ''less objectionable'' we can make the client’s review, all other things being equal, the faster it will come back.  How to make it easier and less objectionable?

*'''[[Escalation]]''': Eventually the client comes back to you, and they don’t like that NAV trigger. The negotiator needs to escalate this to the [[credit]] team. This involves composing that email, sending it and waiting for [[credit]] to read it  and answer. [[Credit]] will, eventually, be fine with dropping the [[NAV trigger]] — that is a 15 sec decision, but it took 24 hours to achieve. Reduce this wait time by:

===Transporting===

Transporting product between processes is a cost incursion which adds no value to the product.  

===Over-processing===

===Unnecessary Inventory===

Work in Progress (WIP) is a direct result of overproduction and waiting.  

===Unnecessary Motion===

===Defects===

Having a direct impact to the bottom line, quality defects resulting in rework or scrap are a tremendous cost to organisations.