Preparing for the Exit

Note: This article was first published on April 4th, 2007

This weekend, I read a very worthwhile article, Preparing for the Exit by Ranjay Gulati, Maxim Sytch and Parth Mchrota in the Wall Street Journal (March 3-4). As you know, I am a proponent of negotiating an exit plan during the initial discussions with your targeted outsourcing partner. The article points out:

”There is no doubt this can be challenging. Like a prenuptial agreement, in which the couple discusses divorce options on their way to the alter, negotiating exit options while still at the formation stage of an alliance seems almost counter to human nature. For one thing, neither partner wants to admit that things could go awry. What’s more, there’s an eagerness to get the deal done – and a fear that raising the worst-case scenario will undermine the euphoria and trust that often accompany a new deal. “

“But partners ignore the issue at their own risk. Discussing the trigger points for exiting, as well as the disengagement process itself, while still in the negotiation stage is paramount to an effective partnership. In many cases, exit planning may actually enhance the alliance’s performance and longevity”.

When outsourcing your supplier chain EDI/B2Bprocesses, the contract and negotiations should address the formal process for communicating the end of the relationship, the ownership of the maps, trading partner setups, mapping instructions, etc. and the process to migrate these to another service provider or to bring these services in-house when the relationship ends.

April 4, 2007