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The automotive industry is famous for its tough negotiations—OEMs squeezing suppliers, suppliers passing the pressure down the line. For decades, that approach was seen as a strength. But what if it’s actually holding the industry back?

In this episode of the Auto Supply Chain Prophets Podcast, Jan Griffiths and co-host Terry Onica welcome Kate Vitasek, leading authority on collaborative business models and creator of the Vested framework. 

Kate has spent nearly 25 years proving that companies don’t have to settle for win-lose deals. Instead, they can build partnerships where both sides succeed.

Kate explains the mindset shift in simple terms. Negotiation means sitting across the table, each side fighting for its own interests. Collaboration means sitting on the same side, co-creating solutions.

She describes how even the most toxic relationships can be reset with the right process: aligning on outcomes, establishing trust, and piloting a new way of working one relationship at a time.

Data is another barrier. Too often, companies stall because they argue over whose numbers are right. Kate insists on one source of truth, even if it’s a simple spreadsheet. Agreement matters more than sophistication. Once both sides trust the data, they can move forward together instead of wasting time in conflict.

Jan presses on a key point: leadership may say the right things at the top, but when directives reach the buyer level, behaviors often revert to “beat up the supplier” mode. Kate acknowledges the challenge and stresses the need to equip frontline teams with new rules, incentives, and the authority to design better processes within clear guardrails.

Toward the end, Kate offers a direct challenge to automotive leaders: don’t send one person to learn the Vested model, send a team. Procurement, operations, and legal must be part of the process so contracts reflect collaboration instead of undoing it.

The episode closes with a reminder that real change won’t come from declarations or slogans. It will come from fixing one relationship at a time, with the right people in the room, the right metrics in place, and a mindset that values shared success over short-term wins.

Themes discussed in this episode:

• Why the traditional adversarial style of automotive negotiations is breaking down supplier relationships and creating long-term risk
• How OEM behavior sets the tone for the entire supply chain and directly influences tier one and tier two practices
• The Vested model as a proven framework for turning win-lose deals into win-win partnerships based on shared outcomes
• The five rules of Vested contracts and why starting with one strategic relationship helps companies pilot change effectively
• Case studies from healthcare, defense, and retail that demonstrate the impact of collaborative contracting
• How one source of truth in data eliminates arguments, builds trust, and enables transparent decision-making across companies
• How companies like IBM and Securitas redefined supplier agreements to create long-term strategic value

Featured on this episode:

Name: Kate Vitasek

Title: Global Authority on Collaborative Business Models and Architect of the Vested Methodology

About: Kate Vitasek is a recognized authority on strategic partnerships and the creator of the Vested® business model, a framework that helps organizations move from “what’s in it for me” to “what’s in it for we.” An accomplished author of seven books and a faculty member at the University of Tennessee, she combines award-winning research with real-world experience from companies like P&G and Microsoft to show leaders how to build collaborative, innovative, and sustainable business relationships.

Connect: LinkedIn

Mentioned in this episode:

• Uniting Industry: How AIAG is Building Resilient Supply Chains Through Collaboration and Standardization with Tanya Bolden
• 2025 WRI Study results: Trust, transparency, and the new competitive edge
• What Is Vested?
• Compatibility and Trust Assessment
• How Walmart Canada Uses Blockchain to Solve Supply-Chain Challenges
• Collaborative Contracting Course
• AIAG Supply Chain Steering Committee

Episode Highlights:

[05:40] Win-Win by Design: The Vested approach shifts negotiations from adversaries across the table to partners working side by side toward shared success.

[07:10] Start Small, Think Big: Instead of trying to overhaul the entire supply chain, Kate urges leaders to test collaboration with one partner and prove the value of moving beyond traditional negotiations.

[08:26] From Win-Lose to Win-Win: By aligning on outcomes, building trust, and co-creating agreements, organizations move beyond promises of “win-win” to contracts that genuinely deliver shared success.

[11:42] Fixing Broken Incentives: Kate Vitasek explains how two-in-a-box deal teams and replacing purchase price variance with total cost of ownership can stop buyer-level behaviors from undermining collaboration.

[18:08] Data That Drives Decisions: From NASA rocket telemetry to Walmart’s blockchain trucking system, Kate Vitasek shows how real-time, shared data can cut waste, build trust, and reshape supply chains.

[21:25] One Source of Truth: Without a shared set of data, suppliers and customers end up arguing over whose numbers are, Kate explains how agreeing on a single source cuts conflict and builds trust.

[26:08] Bring the Right Team: Kate Vitasek urges leaders to stop sending individuals to fix collaboration and instead bring cross-functional teams — procurement, sales, operations, and even legal — to redesign relationships that truly create value.

Top Quotes:

[06:36] Kate: “When you actually stop negotiating and you use transparency and problem solving to co-create, magic starts to happen. Negotiation is ingrained, and especially the procurement people and the supply chain folks are used to getting their way. This term, this deal, this time, instead of how can we take a step back and lower the total cost of ownership for the system, for the supply chain, that we can share success and share those rewards from collaboration.”

[20:40] Kate: “Walmart, they took their ego out and said: You know what? There are over 250 data points in a transportation movement. The temperature, the fuel charges, you wouldn't think there's all this. And it was very inefficient in how they were working. And so, they built a blockchain with their carriers. So, they took one of the carriers, not all 80; they pulled out one, they had a neutral person who was a specialist in blockchain, and they said, “Let’s co-create a blockchain that will make how we collect data in transportation more effective.” They reduced freight claims 97%.”

[25:16] Kate: “We find that when you put smart people in a room and they're in a two-in-a-box, peer to peer, right? They design a better way of working. And that's what we call the vested way of working. Let the people design. So, if your system, and I use that word system, your institution, your policies, your processes, or maybe it is your actual IT systems, is holding you down, let the team decide a better way.”

[32:34] Kate: “You don't go out and change the culture by saying, 'I'm changing the culture." You go out and change the culture one relationship at a time.”

[Transcript]

[00:00:27] Jim Liegghio: I'm Jim Liegghio from AIAG.

[00:00:36] Jan Griffiths: Hello, and welcome to another episode of the Auto Supply Chain Prophets podcast. Let's check into my co-host Terry Onica. Terry, what you been up to?

It was really good to see OEMs getting together to inform each other, encouraging each other to do the collaboration and being so open to do that. And I thought back to early in my career, you know, how it was just the Detroit three that participated in AIAG. And it's so nice to see that now it spreads to Honda and Nissan and everybody else, and they're all just keeping each other updated and collaborating. So, it was great. I really enjoyed the lunch.

And we know that is not easy, but we also know that the behavior of the tier ones and tier twos is directly impacted by the behavior of the OEMs. So, if the OEMs are more collaborative in their style and want to find resolution to something, then that's emulated by the suppliers. I can't tell you how many times I've been in rooms where somebody will say, "Well, GM did that, so we should be able to do that to our suppliers." So, this idea of understanding OEM behavior, I don't know sometimes if they realize how much of an impact they have on the entire industry.

[00:03:04] Jan Griffiths: Yes, I do too. And in this episode today, we are gonna focus in an area that's near and dear to my heart, and we're gonna start to talk about negotiations. Because, as we've said many times, it's not about the what; it's about the how. And this behavioral aspect of how the OEMs negotiate determine how the rest of the supply chain goes.

And in the auto industry, we're famous for our tough negotiations. I mean, we are, right? We're known for that. The OEMs push on the tier ones, the tier ones push on the tier twos, and off it goes.

But here's the real question, and that is, is this adversarial style really serving us anymore? Because we often think that a sign of strength is how tough we are in negotiations, but my experience tells me that, hey, you might win that little battle for a day, but you sure as heck are not gonna win the war on that one.

I wonder if it's time for us to look at this a little differently. And if we look at the last WRI study, it shows that there are cracks in the supplier relationships between suppliers and OEMs. And we've got to talk about a different way forward.

And it's one thing to say, "Oh, well, we gotta be more collaborative." Try telling that to two people going into a negotiation head to head on supply of widget X for the next five to six years. You know, no, we're very much like, we know we gear ourselves up for battle and off we go.

So, that's why today I am thrilled, Terry, that we have on the show a global leading authority on this subject. It is Kate Vitasek and she has built her career on rethinking how companies work together. She is the force behind the Vested Model, a philosophy that turns win-lose negotiators into win-win collaborations. She is the recognized global authority in the field and the author of, not one, but seven books on the subject. So, does she know what she's talking about? Oh, yes she does. Kate, welcome to the show.

So, it's always fun to get to share just a little bit of our research and maybe inspire people with the art of the possible when you turn from negotiating to collaboration.

[00:05:50] Kate Vitasek: Well, the simple word vested, I think kind of gives it away just a little bit. Because when you think about the word vested, most people will say, it conjures up is I have a vested interest in your success. I have some skin in the game, a win-win type of a relationship.

And that's really what we do with the work, the process, the business model of Vested is we teach people how to, instead of negotiating, when you negotiate, you sit across the table, and when you're collaborating, you're on the same side of the table. And so, that's where it all starts, is by thinking about the process and just getting that mindset that, you know, if you're negotiating, your interests aren't aligned and you can go at it, like you said, Us versus Them, and try to hit harder and harder.

But when you actually stop negotiating and you use transparency and problem solving to co-create, magic starts to happen. Negotiation is ingrained, and especially the procurement people, the supply chain folks, they're used to getting their way. This term, this deal, this time, instead of how can we take a step back and lower total cost of ownership for the system, for the supply chain, that we can share success and share those rewards from collaboration.

[00:07:25] Kate Vitasek: Well, it's interesting because I always say you can't just change a policy or go, "Oh, I'm gonna be collaborative today." It really starts, I'm just saying, "Change the world, one relationship at a time." So, I would tell them, pick your most strategic relationship. One that isn't working but should be working. And it doesn't have to necessarily be adversarial or toxic or horrible, but it's just not as collaborative, it's not as innovating. Innovating, as it should be.

And so, give it a try. And so, the vested process really is a methodology. And so, you come to the mindset that, you know what? We were negotiating, and I wanna put that old school way of negotiating. Even if it was more modern, interest-based approaches. You can get to yes, but you are still back at the negotiating table. And so, let's put the concept of negotiating away for this one relationship. Give it a try.

[00:08:42] Kate Vitasek: Well, and again, this is why I say, "Pilot it. Change the world one relationship at a time." But I'll give you an example from the Canadian governments between the Island Health Authority and their doctors. Toxic, even bullying, right? And so, it was very much Us versus Them in how they got to their contract, and it was very frustrating.

And so we sat down for three days in an offsite. There's five rules in the vested methodology. So rule one is about alignment, outcomes, a shared vision. What they do is we create what's known as a statement of intent, and we do something similar to the WRI Study. It's called a compatibility and trust assessment. So we put that trust score front and center for that relationship.

When I look at the WRI study, it's collective. We are like, this is your relationship front and center. You can't hide from that. And so, we challenge them. Do you want this relationship to work or do you wanna continue negotiating to get your contract?

And so, if they're willing to change their mindset. And we go, you know what? When you leave here, but for the next three days, we're gonna use some tools and tricks and tips to help us rethink this relationship. And the physical act of working together to come up with a statement of intent. Using collaborative tools instead of negotiating tactics, starts to get people to walk down the path and they like what they see.

They walk outta that meeting going, you know what? This collaboration thing, now that you've kind of taught us and given us some tools, I kinda like where it goes. And then if they like that, then they go to rule two, to rule three, to rule four, to rule five, and voila, at the end of the process, they have a contract that really is win-win. So you're not just saying win-win anymore, you're actually becoming vested in each other's success through alignment of interest.

But I think the OEMs have learned, and even the tier ones for a certain extent, that if you come in like that with the bully, like, "Do what I want or I'm gonna punch you in the nose." They've learned that you could do that, but suppliers end up going outta business. They end up going bankrupt. So, who's winning at the end of the day? Nobody's winning in that kind of scenario. So I think there is some sensitivity now that, hey, maybe we better figure out how to collaborate and how to work together.

But the one thing that I have heard several times in the last two to three years, and actually the first time I heard this was from John McElroy, who's a well-known thought leader in the auto industry, and he said, the OEMs often align on the senior level with the tier one senior level CEOs, right? And they are, yeah, yeah, we're gonna work together, we're gonna be collaborative, where it all breaks down is the buyer level. By the time it filters all the way down, the behaviors on the front line are very different because we reward that sort of tough guy behavior. How do you get people off that Kate? I mean, give us an example. I know some of the companies you work with are not automotive, but they're pretty significant companies.

So you have this intent, as you mentioned, the leaders at the top wanted to be collaborative and it breaks down when you go further down the organization. And so, this is where we would take and create a two in a box deal architect team. So that buyer is tagged to the salesperson, and that happens all the time naturally, but usually it's stuck there. But we go deeper with that and we create what's called a deal architect team. So, operations to operations, planning to planning, right? Leader to leader. And so you create this two in a box deal architect team, and you challenge them to look at the ways that they're working.

And there are five rules and 10 contractual elements to vested. And what you see is when people can step out of the negotiation mindset and start to look at the relationship, they're cheating on the rules, not because of a lack of intent, but a lack of the organizational reward structures.

For example, procurement, one of the absolutely horrible, horrible metrics that procurement people have is called purchase price variance. And so, if I get rewarded, if I bought something for a dollar, Terry, I can come back to you, and if I can get the same thing for 97 cents, then I get rewarded. My metric is on PPV, and I may even get a bonus. So it's now in my best interest to go beat up on you, Terry, even though the bosses said you need to be more collaborative.

So we have people go through the two in a box deal team, right? That isn't just at the leaders, but it's at where the work gets done. They go through each rule and they challenge how they're working and going, well, that metric, that just creates a perverse incentive, doesn't it? Well, okay, well, you can throw that metric out. And so, the team then is empowered through guardrails. And so the bosses at the top set the guardrails, and as long as they stay in the rails, they can change the processes.

So, gosh, you know, now that metric, purchase price variance doesn't make sense. And so I'm empowered then to not have that metric, to replace it with other metrics, such as total cost of ownership. When we collaborate and we reduce cost structure, that's how I'm rewarded. Cross organizational supply chain efficiencies.

But I can't tell you how many times in my career, Kate, I've said to somebody, "You want PPV? Oh, I'll give you PPV, but I'll bring every plant to its knees with cheap quality, or I'll bury them in inventory. So what do you want?"

And then the whole idea, we've been talking about total acquisition cost in the auto industry for some time, but we don't really have the systems in place to be able to measure it properly. So it comes back to the silo way of thinking again. And it comes back to purchase price variance because that's the only metric that's easy to relate to the finance community, 'cause the finance community they don't wanna talk about anything else. They just wanna talk about, did you save the cost or not?

And Jan, this is why I laugh, but I have this saying, "If you're negotiating, you've gone down the wrong path." Turn around and ask a different question. How do I optimize? How do I collaborate? How am I transparent? How am I working together to share data to lower the TCO, to speed the market?" Let's change out our metrics. And if that means you have to have some rudimentary Excel spreadsheet to track your metrics, you track the right things in your little pilot and it will work, then you can go back in and start to change your systems, 'cause it's those systems, those institutional systems, the transactional ways of working that are holding us back.

[00:18:26] Kate Vitasek: Well, I think it's really powerful if you can get all the way down to the end user type thing. So the closer you can get to where the real information is happening, the better. And I'm going to give you two examples here. One of the companies that has done a vested agreement is Deweysoft, and I don't know if that rings a bell, they're just a little, tiny Slovenian company, but they actually have the telemetry for NASA.

So when those rockets go and like go in the air, they're measuring and taking all of that data. So they have the sensors and the data, and it's amazing what you can do with the sensors and the data, right? But they also work with most of the automotive manufacturers, putting in the telemetry and stuff like that. And so anytime you can get the data on where the work is done. That's awesome.

The second example that I'm going to give you, actually it was just on, I write for Forbes Magazine on collaboration. We're just doing an interview with the CEO of a company who's rethinking clinical trials. And so they're giving all of the patients — and her work that she started is around ALS — so they give all the wearables and the sensors to the patients. They're taking, looking at that big data now, taking it going back to the researchers. And they're connecting the researchers with the data.

So anytime that you can get the operational type data in real time, very transparent, and it's not just within my four walls. It's cross information, right? It's cross organizational. You're going to be able to optimize more.

And I'll give you a third example, 'cause this one's really fascinating, I wrote about this in Harvard Business Review. Walmart Trucking, kind of boring, right? Transportation, go pick up the stuff, drop it off at your Walmart. And so, they use, in Canada, 80 different trucking, very transactional trucking organizations.

So they created, with the carriers, not big Walmart, going on Walmart, but they took their ego out and said: You know what? There are over 250 data points in a transportation movement. The temperature, the fuel charges, you wouldn't think there's all this. And it was very inefficient in how they were working. And so they built a blockchain with their carriers. So they took one of the carriers, not all 80, they pulled out one, they had a neutral person that was a specialist in blockchain, and they said, let's co-create a blockchain that will make how we collect data in transportation more effective. They reduced freight claims 97%.

[00:21:37] Terry Onica: Right. Yes.

[00:21:47] Terry Onica: Yes. Yes. One source of truth. Yes, absolutely. That means between the customer and the supplier, you're looking at the same data. You're not looking at separate data.

So having that data and having it being recognized by both sides as being true and correct, even though — the people who are not familiar with auto, if they happen to be listening to this, they're going, well, surely, you have that right? Well, no, we don't. But getting that data, getting that data clean and transparent first time is a critical step. I never realized how important it was until this very moment.

And so, sometimes that means, well, this data, we're gonna use the suppliers. So even though I may have something, I'm not gonna use mine, I'm gonna use the supplier's. But for this particular data, we're gonna use the buyer's side. And so, they choose.

So if they can't get to the same unified data point, they choose which system they wanna use. One system of record, regardless of who it's comes from. So you're building up the data that you're gonna use. Your data, my data, for this. Your data, your data, my data. And this way it eliminates that Us versus Them.

[00:23:40] Kate Vitasek: And then I can look at the root cause analysis, and if I don't like your data, then I'm looking at root cause. How do I make it better? Again, we're not negotiating. We're just saying, you know what? It's so important to have common data. We're gonna share and we're gonna stop bickering as it yours is better than mine and it's not the same. I'd rather go and improve, Terry, your bad data. I'd rather work to improve it, 'cause we're gonna get so much better than the bickering.

[00:24:25] Kate Vitasek: And that means I might walk away from your system of record for that particular item.

[00:24:52] Kate Vitasek: Agree.

[00:24:53] Kate Vitasek: But I'm pulling your information. And this is where, today, the technology is APIs and different things are making it so much easier when it was really hard in the past. Now, you can have an AI overlay on top of some of that, and it's gonna just go, yep, I'm pulling from here. I'm pulling from here. Here's how we do that.

And so, we find that when you put smart people in a room and they're in a two in a box, peer to peer, right? They design a better way of working, and that's what we call the vested way of working. Let the people design. So if your system, and I use that word system, your institution, your policies, your processes, or maybe it is your actual IT systems is holding you down, let the team decide a better way.

Like I said, I'd rather have a rudimentary Excel spreadsheet that has one version of the truth than some fancy something else that is we're Us versing Them. And the people solve it. Every single time we see that it's stunning. When you give people a set of guardrails and some new rules, and the rules are based on collaboration, they always rise to the occasion.

[00:26:35] Kate Vitasek: I would say bring two to three people from their company, two to three people from their most strategic relationship that they wanna work better, come to my executive education class with an open mind.

[00:26:50] Kate Vitasek: And don't send one person, because then they'll go back, and they'll go, "Wow, that stuff is different." Like, come as a team and you work as a team. You bring your relationship to the class, you walk out understanding how you would approach that differently.

[00:27:13] Kate Vitasek: Well, when we're actually doing a deal architect team, there's at least four roles that we want. Now, sometimes those people play multiple roles, but it's procurement and sales, right? But it's at least one person in operations because they're the ones that feel the pain.

[00:27:29] Kate Vitasek: Right? And then, if not to the class then but later, your lawyers have to get involved. Because even if you can get procurement and sales and operations, you're still dealing with a contract. And so, what we don't wanna do is have people go down a bath, and they're going, "Oh, I'm gonna create a vested relationship." And the lawyer's like, Yeah, I've never heard of that. A formal relational contract? What is that? Never heard of that before.

So one of my success stories — and I don't have a formal case study on it — but they just pitched by Southwest is IBM and Securitas. And they did a podcast on that, and they sent 10 people. So they actually sent a group of five, two in a boxes. And out of that, they challenged and said, "You know what? We are not thinking about this right. We're thinking about security as man guards, right?" That's actually the term they use. "Oh, it's just a transactional man guard. How much does it cost your man guard cost?" Right?

And the Chief Security Office, Robin, his head was exploding and he is like, "No, look at everything we could do with how we rethink security." And it's like, there's so much. The cameras, the intelligence, the monitoring, and there's like tons here that we could be creating value.

They sent 10. Now that's a big group. We like to see at least two on each side. Three on each side would be really good, but at some point you are gonna have to get your lawyers involved because the business people can't just go away, recast how they work, and then have the contract anchor them in their old way. And so the contract has to follow.

I mean, this is one of the things we teach. If this is the intent of the relationship, it goes through procurement and it loses value, then it goes through legal, it loses value. Well, no wonder these relationships don't work, right? Because this is what you wanted on the back of the napkin, and this is what you contracted for.

You know, I always say, you got what you paid for. Turn around and ask a different question. And when you put those smart people in a room, you give 'em some guardrails and five high level rules that they have to recreate their relationship, following these rules, magic happens.

If I'm a customer, we're all on the same page. We all know what we're telling the supplier. If I'm a supplier, I know now what I'm getting myself into to talk internally to the team. Because often you hear on the supplier side like, well, I'm on the supply chain side or at the plant. I never heard of what they were negotiating. So I think there's just that other added benefit of what you're talking about, just getting both sides on the same page, forcing that issue, and I can't imagine that doing anything but creating tremendous value.

But here's one way that our listeners can start to do that. Obviously, connect with Kate and read her articles and her books and attend her education center. Of course, that's one thing. But the other thing is AIAG is an organization that's out there ready to receive people, members, to get on the supply chain steering committee, to start to look at these things.

You know, maybe this is something that should be on that agenda, I don't know. But to our listeners, if you're not on there, contribute, get involved, get engaged, and let's turn this industry around. We can do it. Ford announced today their new building, it's called The Hub. And one of the reasons they're doing it is because they want everybody working together in the same building in a different way. This is a classic example of how you could do that Ford Motor Company.

[00:31:42] Jan Griffiths: Yes.

And so the vested way is really about five rules that when you say collaboration, when you say strategic partnership, it forces you in how you come together and changing those rules and people love it.

And so we did mention on the WRI study, but we do something similar in a one-to-one relationship called the compatibility and trust assessment. And you see the words changing from transactional Us versus Them to collaborative, total cost of ownership, win-win. And that's exciting because, Terry, you mentioned culture. You're changing the culture, but you don't go out and change the culture by saying, "I'm changing the culture." You go out and change the culture one relationship at a time.

[00:32:50] Kate Vitasek: Awesome. Well, thanks for having me. It's always a pleasure to share our research.