Advantages and applicable conditions of "contract control", "equity control", "managing output" and "establishing incentive mechanism"

Mei Zheng Group is an enterprise that insists on honest management and sustainable development, and this business philosophy is deeply rooted in the hearts of every manager. We are also very sincere in dealing with customers, selecting suppliers, industrial and commercial outsourcing, project contracting, etc., because we believe that honesty is the basis for establishing a stable and long-term cooperative partnership with each other.

Therefore, Mei Zheng Group and each of its affiliated enterprises have never been mentioned or paid attention to in many aspects, such as legal awareness, collection of laws and regulations, management and control of the rule of law, operation of the rule of law, legal risks, legal application and so on.

With the intensification of market competition, the relentless impact of meager profits, the strict requirements of environmental protection laws and regulations, the escalation of trade barriers such as the control of more harmful substances, and the recession of the world economy, the traditional business philosophy of honest management is facing great challenges.

In today's materialistic world, how should our enterprises avoid their own business risks? How to legally and reasonably transfer customers' strong demands and compensate risks? How to effectively manage our suppliers, especially powerful suppliers? How can the law protect the interests of enterprises to the maximum extent? These problems should become the realistic challenges that our group must face now and in the future.

At present, in addition to various "purchase contracts" signed with different customers, there are also some "environmental protection agreements" and "compensation for breach of contract", all of which are our customers, taking actions to reduce their own business risks.

Although we have signed our own annual procurement contract, the implementation degree and mode of each factory are different, and some calculation methods and standards are different, which greatly hinders the implementation of the contract. And most powerful suppliers can't sign contracts. They only recognize the sales contract in their own company format and will not sign the purchase contract with us. Therefore, once there is a dispute or business risk, they can find the most favorable terms and explanations from their own contracts, and transfer their faults or mistakes to the vulnerable groups in the form of law to ensure the maximization of their own interests and the minimization of risks.

Some medium-sized suppliers have accepted and signed purchase contracts with us for various reasons, but at the same time, they usually add some supplementary clauses or proviso to the contracts to avoid their own risks. Most small-scale suppliers can sign purchase contracts, but although they have signed them, due to the economic strength and legal form of small-scale manufacturers, their responsibilities are generally limited, and there are no relevant feasibility guarantee clauses in the contracts, so that once risks occur, the contracts are just a dead letter and cannot be fully implemented.

..... In addition, there are many practical problems before us, such as format contract, format clause, exemption clause and signing form. But we didn't pay attention to them and reflect on them. ...

Moreover, our group ignores the contract control and risk control of outsourcing processors, and outsourcing suppliers should be in the same control position as suppliers, and should not be neglected.

At present, most of the outsourcing manufacturers of the group are located around the group, mainly relying on traditional family workshop technology, and surviving by providing simple single-process printing technology and sporadic small orders. There is no systematic management system, no effective traceability mechanism, and no ability and strength to take risks.

Its operation is flexible and risky. Although some guarantee agreements or compensation agreements were signed under our pressure, the contents of the agreements are too broad and there is no "guarantee" clause. In case of emergency or breach of contract, due to its limited assets, if there is no reliable guarantee, even if legal procedures are taken, economic losses cannot be recovered.

Two. Contract control suggestion

A. unification of procurement contracts

It is reported that at present, the procurement contracts of the factories in the group are not uniform, and some factories may not have their own contracts. Moreover, the target to be signed every year is only limited to some large raw material suppliers, or we only take the initiative to sign fixed-format contracts with them. It is impossible to protect our interests by using the fixed format contract of the other party.

There are full-time legal staff in the headquarters. I wonder if it is possible to draft all the external contracts of the planning group in a unified way, including: procurement contract, outsourcing price contract, engineering contract, environmental safety contract and so on. Unify and standardize the contract-based and * * * related clauses, such as: main rights and obligations, compensation clauses, confidentiality clauses, liquidated damages clauses, MFN treatment, dispute settlement methods, etc.

According to the laws, regulations and systems of the regions where each factory is located, as well as the requirements and characteristics of its own customers and suppliers, each factory will add individual clauses that need to be standardized in the form of other agreements, and the specific details will be agreed upon by both parties, so as to maximize the interests of the Group and achieve the purpose of "reducing operational risks". The bigger the group, the more relationships there are, and the greater the risk it may suffer. How to protect one's own interests under legal circumstances may be a new topic worthy of discussion and in-depth consideration. ...

B. the terms of the order should be clear.

The order notice of our group's factories only involves: product name, material number, specification, quantity, delivery date, unit price, etc. , just some basic subject information. There are no requirements such as delivery place, liability for breach of contract, delivery method and defect guarantee.

Drawing lessons from the order notices of large international companies, almost every company not only regulates the information of the subject matter of the basic order, but also includes many detailed terms such as quality assurance, dispute resolution and liability for breach of contract. Once a dispute occurs, you can directly use the order as direct evidence to solve the dispute and protect your own interests.

If the order is not as standardized as that of a large international company, it can be clearly stated in the order that all behaviors and specifications of the transaction are in accordance with the purchase contract signed by both parties, but the premise is that the purchase contract must be executed and signed. If we can't sign the contract, once there is a dispute, it can be said that from the perspective of litigation, we are definitely at a disadvantage, because we will not be able to produce effective evidence to safeguard our rights and interests, even if there are industry norms and trading habits to follow, it is far from enough.

C. specific categories of risk management

Partners in different industries, different natures and different scales can consider implementing different management standards.

For example, the ink, solvent industry and adhesive products industry, because of their professional and unrecognizable chemical composition, must have a high risk coefficient, which should naturally be regarded as "key control objects", including: strict contract signing, clear risk transfer, strict daily management and feed management, batch number management, risk assessment and audit management.

For example, in industries such as coating glue and insulating materials of plastic molds, there must be some high-risk environmental management substances and a large number of flame retardants used in the electroplating process, which should also be included in the "key control objects", including the learning and control experience of its technological process.

For ordinary paper, uncoated plastic molds and other adhesive industries, due to frequent use, plus decades of experience and data collection, the risk coefficient is actually not large, and the control strength and methods can be considered as daily control.

For example, those consumables that are not the main materials, such as consumables, hardware and general consumables that are not in contact with products, can completely lower the standard and reach the cost standard of "good quality and low price".

Because "the intensity of control" is directly proportional to "the cost consumed", of course, how to define the risk level and how to standardize the control method should be determined according to the different requirements and characteristics of each factory. In fact, professional staff units can provide suggestions and guidance on chemistry, technology and methods.

D. Evidence preservation

For example, we signed contracts, letters of guarantee, orders, ICP test reports, incoming materials acceptance sheets, customers' environmental protection requirements, authorization certificates, etc. And it is suggested to keep it permanently, because these written evidences are the most direct and powerful litigation proof materials in the case of legal disputes.

Electronic preservation of important data is also a new consideration. Doesn't mean nothing will happen in three to five years. What enterprises want is sustainable development, and the risks may be permanent.

Three. Management of strong suppliers

The "strong supplier" I mentioned here is temporarily defined as: the products traded or the services provided are designated by customers; Or the product has absolute advantages in technology and market share; Or some other monopolistic products, so that we can not freely choose or own the manufacturers of substitute products.

The management of strong suppliers is a very challenging part of supplier management. The Group does not have a full-time supplier management function department, and the supplier management function has been shared by procurement and quality assurance. Sometimes it is inevitable that there will be a vacuum zone, shirking responsibility and invisibly burying hidden dangers. Of course, the management of strong suppliers is not at a loss. From another perspective, if suppliers are well managed, they can really implement the group's policy of "reducing operational risks" and add a lot of added value to the company.

At present, the group's strong suppliers are: 3M, SABIC, Avery Denison, Nitto, Mitsubishi, etc.

1. Sign a strong supplier contract

Strong suppliers will hardly accept the contract requested by the buyer, and some will directly deny it without even looking at it. If buyers are small in scale and have little influence, it will be difficult to buy their products, let alone "operate". Take the familiar 3M Company as an example: If you want to buy the products of 3M Company, there are two ways:

A. buy from an agent or distributor.

Generally, there is no strong situation, because you can choose different agents or distributors, and you can buy them if you have money, but there will be differences in prices and services, but the management of prices and services is much simpler than the management of strong objects.

B. buy directly from 3M company.

Becoming a customer of 3M Company is not that simple. Maybe our group is big enough, and 3M will treat you differently. According to the normal procedure, they should investigate you first, or be recommended by the business personnel of 3M Company, and sign the stipulated purchase contract, application, guarantee, credit rating evaluation, etc. Only when it is finished can they get a supplier encoder. That's not all. After placing an order, you have to pay first, and then they will arrange delivery for you. Large-scale buyers can deposit some cash as your credit guarantee, which will avoid the problem of payment to delivery.

In short, it will make you feel that you are a supplier, a customer and a big customer who can't afford to offend, but direct purchase will have certain advantages in price.

To some extent, the contract of a strong supplier is forced to sign in disguise, but once we sign the contract and can't provide evidence of contracting fault, we must abide by all the obligations stipulated in the contract. This kind of contract is quite different from the "standard contract", so the relevant jurisprudence of standard contract cannot be applied.

If we violate our obligations, we will bear the corresponding liability for breach of contract. Therefore, when we receive the signing request from a powerful supplier, we should submit it to the Legal Department for review and comment, and actively organize relevant personnel to negotiate with the supplier for more rights. But what have we done so far? Reading the terms of the contract will scare you away from buying things.

If the supplier is too strong and must buy, negotiators should seek more ways and resources, such as asking our end customers to come forward to coordinate, asking competitors to put pressure on bidding, asking the top management of the group to come forward, and even seeking government intervention.

When all resources can't change this powerful supplier, we should at least strive for some jurisdictional convenience. After all, we are familiar with local laws and regulations, especially in international trade, and jurisdiction should be paid more attention.

In addition, from the legal point of view, some statements of powerful suppliers can be in the form of offers issued by the declarant, which are directed at any unspecified third party and generally cannot change the contents of the offers. As long as someone responds, the contract is established, indicating that you have agreed to the contents of the statement. In other words, once we place an order with him, it means that we have promised to bear the possible risks of the transaction, and we will also bear the problems ourselves.

Usually, powerful suppliers always talk about some broad definitions and guarantees in their statements. Even if there are actual data, they will not standardize the measurement methods and judgment standards, and there is no such thing as liability for compensation. Moreover, in the statement, they usually put the responsibility entirely on the buyer. For example:

"Our company declares that we will not maliciously add any halogen substances in the production process and technology-the statement made by our company is only based on the information available to our company and the data provided by suppliers-"

Such a statement means nothing to us buyers.

Some personal suggestions:

1. Material composition analysis and BOM control

Train or recruit chemical-related professionals as professional assistants, and all departments cooperate with them to make statistical analysis of the chemical composition of all raw materials and materials used by the Group, and make statistical analysis of the chemical composition of all materials in combination with international and domestic regulations and customer specifications, and make a BOM table, so as to clarify the risk level and control standards.

2. Material control points of environmental management

Improve the batch management, X-ray inspection and outsourcing sampling inspection system. Although the supplier provided ICP test reports from third parties such as SGS, CTI and ITS, the data in this report can only prove the content of harmful substances in the samples submitted for inspection. Broadly speaking, products with the same batch number can be inferred, but products with different batch numbers cannot be proved.

The existence of unstable factors, such as the stability of material production batches, the stability of sub-suppliers and the stability of process materials, makes it necessary for us to carry out "batch management". Instead of getting the ICP test report, you can "sit back and relax", and each batch must be verified and controlled. Powerful suppliers are better controlled. Although they have reliable technology and famous brands, "no matter how smart people may lose their sense of touch", we have no way out. They have many exemption clauses.

3. Implement strict review system for the introduction of new manufacturers and new materials.

The introduction of new manufacturers must be strictly assessed on site, and the candidate manufacturers with poor process and control ability must be carefully selected.

Group supplier management is a "historical problem", because it has been done, so many times we can't change the status quo and it is difficult to make a breakthrough. In the process of trial-production of new materials, relevant environmental protection agreements, transaction risks, liability for compensation, joint and several liability, intellectual property rights, etc. must be signed. If we don't sign it, we must never try production and never introduce risky materials.

4. Thinking change

Since we can't compete with powerful suppliers, we might as well change our thinking. Traditionally, we regard powerful suppliers as invincible enemies, and we hate them. We dare not "love" but have to "love" because we have no choice.

Actually, we can think differently. Since we can't control it, let's draw it well and lure it to the track we hope, which is beneficial to both sides.

A. We can use the "bait" of the total purchase amount of the group to make them delay three feet. If they are interested, naturally talk about conditions;

B for the materials specified by customers, we can invite customers to participate in the negotiation of certain requirements. "Look at the Buddha rather than the monk", annoy customers with * * *, and we will have the opportunity to suggest customers to change materials to see if you are afraid.

C. "Playing hard to get", we pretended to lay low and didn't confront him. For materials that we can't choose, we can ask them to recommend substitutes or invite them to develop a code name belonging to Mei Zheng Group, so that powerful suppliers can talk to customers. Once successful, we will master his circulation channels and tailor our wedding clothes. Are you afraid that he will dare to marry someone else?

D. "Get the upper hand with the enemy". When the 3M company is strong, I will seek development from Avery Company, and when the Nitto company is strong, I will seek development from Sartre Company. Although many times we can't convince customers to change materials and let them know each other: there are still enemies in this industry who are equal to me, so he won't be so arrogant when he finds an opponent;

These small measures may not be applicable and are for reference only. In fact, what commercial enterprises want is sustainable development. There are many conditions for sustainable development, and of course it is inseparable from the win-win cooperation of excellent supply chains.

A strong supplier like this, although procrastinating, awesome and strong, will also have cost pressure and operational pressure, and will also be bound by the system and corporate culture. In fact, we can use its strong technical ability, sales network and brand to help our cause and jointly develop more markets for mutual benefit and win-win results.