Over-processing

Headline: Contractual risk protection standards, for both parties, are stuffed with redundancies, anachronisms, over-reaches and nice-to-haves. Each one is liable to challenge. Each challenge brings its own process wastes.
In its original physical manufacturing sense, over-processing refers to unnecessary complexity in design, whether brought about through careless design or over-specification. The production cost of features that neither you nor your client are realistically ever going to use is as much a form of wastage as any. The chief production cost in negotiation is time and human resource. It follows that the longer a contract takes to read , and the more it invites challenge, the more expensive (in these terms) it is to produce. Any time taken over the utter minimum and any client challenge to a term that is not vital the the firm's risk protection strategy isa form of waste in the process of reviewing review approving and concluding the client contract. As we have seen, client challenges to credit terms create their own additional wastes (waiting, transport, as well as risking of overproduction and defects).

While credit teams do not typically monitor or collect data about the frequency with which they invoke specific credit terms, we know for sure that well over 90 percent of contracts are never closed out at all, and the vast majority of those which are closed out generally make use of standard (uncontroversial) events of default which are generally not challenged in the first place: failure to pay, or insolvency.

  • Credit points never used
  • Superfluous templates
  • Redundancy
  • Unnecessary drafting
  • Reading/reviewing unnecessary/convoluted text

Summary: "