Add ideas of your own to the list in Figure 6.12 concerning methods for reducing risk and adding value.

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Internal Management of Firm External Arrangements . Cost controls Controls Setting milestones Monitoring outflows Quick response Reduce accounts receivable Incr ease accounts payable Improve delivery times Supplier cooperation . Productivity increases . Contract arrangements Incentive systems Labor coordination Take or pay clauses Penalty/incentive clause Performance-based contingent * Technological innovation Computer simulation of performance claim Match exposure to interests Length of contract commitment Reliability requirements Termination option Variable usage option Staged investing Extensive prototype testing Use of proven designs Pilot plant . Product improvements Marketing studies Field tests Shared development Tried and true fallback systems Financial Markets Hedges Options Derivatives Shared ownership Risk sharing Alliance Joint venture . Manufacturing capacity Flexible machines Commonality of product design Agile workforce Globally integrated planning Spare capacity (machines, parts) e Insurance against contingencies Targeted Marketing