I. Introduction to Steel Strap Supply Agreement

A negotiation of a complex steel strap supply agreement between a buyer and a seller was simulated for Cyberweek 2003. A real case of this type would also include face-to-face meetings. However, for the purposes of this exercise, we simulated only the online activities. The actual simulation took place over several months prior to Cyberweek 2003 and is was replayed in fast-forward during February 24 – 28. Following is an adapted version of that simulation, adjusted to include features of Smartsettle not available at the time. Steel Strap Agreement

Participants

Senior Facilitators: Dr. Ernest M. Thiessen and Ken Fraser of Materials Management Ltd. (MML) in Vancouver BC.
Buyer Facilitator: Keith A. Schulner, MBA, MDR, Esq.
Buyers: Nick Fenn, Alan Wiener, Les Thiessen (Civil Engineer in Nelson, BC)
Supplier Facilitator: Kathryn Munn
Supplier: Jeff Boynton (former employee of steel strap buyer in Chicago)

Most of the role players in this simulation had no formal affiliation with Smartsettle. Their participation did not necessarily imply endorsement of this technology or method of negotiation.

Preparation & Training

All participants were experienced with Smartsettle. It was recommended that observers also orient themselves to more fully appreciate this simulation. Recommended orientation activities include the following.

Case Information Review

This simulation is based on a real case for a number of steel strap receiving sites. View the prior agreement for one of those sites. We are assuming that the existing agreement is about to expire and that the Buyer and Supplier are negotiating an agreement for a new term for ten identical sites, i.e., multiply the estimated volumes by ten for the purposes of this negotiation. For the purposes of this simulation, we have simplified by fixing certain variables at their previous values.

Each player has been given confidential information describing their own preferences, including a spreadsheet that was supposedly used by their negotiator last time around. Each side was encouraged to identify private performance variables based on the information in their spreadsheet. That information may be obtained by sending a request to info@smartsettle.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Create a Single Negotiating Framework

Both parties with their Facilitators will work together to create a Single Negotiating Framework for Agreement. Once a Framework has been agreed to, the senior facilitator will create the shared information consisting of the names of the parties and a concise list of the decision variables (issues).

Exchange Proposals

Parties may submit proposals on their own or with the assistance of their Facilitator.

Enter Preference Information

Each party, assisted by their Facilitators, will enter the following confidential preference information.

  • Preferred outcomes
  • Relative importance of each decision variable
  • Satisfaction function shapes (if necessary)

Generate Suggestions

Either party may have Smartsettle generate Suggestions for consideration at any time during the negotiation. Facilitators may need to help parties fine-tune their preference representations. Parties may accept any package that would be acceptable as final agreement, including Suggestions generated by Smartsettle.

Reach Baseline Agreement

When both parties agree to the same package (yellow acceptance marker turns to green) a binding agreement will have been reached.

Generate Improvements

Facilitators will work with the parties to fine-tune their preference representations if necessary before having Smartsettle look for an Improvement. Parties will consider any new packages generated by Smartsettle and accept any that are better than the baseline agreement.

Finalize Agreement

At the agreed deadline, the senior Facilitator will declare as final, the best agreement found. The Single Negotiating Framework will be filled in and signed by both parties.