As the auto industry closes the chapter on 2022 and begins 2023, we can all be certain of this: It will continue to be a bumpy ride.
There will continue to be chip and other component shortages, raw material and shipping cost increases and labor issues, just to name a few. This year, every supplier has dealt with seeking price increases from customers, while responding to price increase demands from suppliers. So, while you can’t make all of these market stresses stop, you can minimize risk and put yourself in the best contractual position going forward.
Here are the top three steps to consider in 2023:
- Identify your biggest customers and your biggest suppliers, and “audit” those contractual relationships – the quotations, POs, LTAs and the like. Conduct a legal risk assessment of your current contractual rights and obligations. Do you actually have the long-term agreement you think you do?
- Review your form sales and purchasing contracting documents – your standard RFQs, quotes, POs, LTAs, invoices, acknowledgments and terms and conditions. Do they protect you as much as they could? When is the last time they were updated?
- Take time to conduct a legal training of your sales and purchasing teams. It can be worth its weight in gold. This allows the executive team to implement or re-enforce contracting strategies and goals, and ensure that the teams understand how best to position you during the contract negotiation process.
