a factual analysis to drive decisions and improve business results and supplier relationships
Do you have suppliers you feel are not contributing to business value as they should? Are you stuck in circular debates on accountabilities with suppliers and do you question if the contract still works for you?
Would you prefer to have discussions with your customers or suppliers based on solid facts as opposed to, often conflicting, opinions?
Our structured, fact based assessment provides quantitative and qualitative insight into where your contract may be undermining your sourcing objectives. It’s a strong formula that provides you the following:
- Immediate impact on business focus and priorities with suppliers.
- Visibility into how contracts support or hinder achieving your business needs.
- A transparant foundation to drive better results with minimized time and effort.
- Right-sized controls/metrics to reduce risks and costs for monitoring and enforcement.
- Align the financial model and commercial levers to contractual objectives empowering
improved supplier governance and steering. - A fact based foundation for constructive and collaborative discussion between the parties.
- Enhanced communication potential to improve business stakeholders and supplier relations.
- Insight on how to clarify and transform the image of the contract with your organization.
- Ability to speed up negotiation and improvement processes.
fact based contract assessment and recommendations
To answer the core question: ”Can the contract (still) be considered a strong instrument to underpin current and future sourcing objectives?”, we apply a fact based and verifiable approach. We evaluate the contract on quantitative and qualitative aspects of the criteria hereunder and their logical interrelationship. Our 5-star Contract Manageability Rating, based on quantative data of these criteria, shows overall quality in a single view.
Business focus
Business focus provides insight into the degree to which the contractual obligation and services provided, support business objectives. A good contract is based on business goals and if this is not the case you will want to adjust this.
Financial alignment
Financial alignment refers to the degree to which the cost-drivers in the contract related to the services provided. This relation is fundamental to effective sourcing governance. If the relation between cost and result is ambiguous you are not sure that you pay for what you get.
Balance
Balance provides insight into the relationship between contractual obligations and controls or mitigating actions. Value obligations define the services to be delivered, while controls aim to minimize risk. An excess of controls lead to bureaucracy and unnecessary costs. A lack of controls, also calls for action as it leaves the organization exposed to risk.
Readability
Bulky, complex and difficult to read contracts result in business risks; they are more likely to be ‘left in the drawer’, ignored or misinterpreted. Performance is impeded if people don’t have a clear picture of what is agreed and what is expected from them. The evaluation provides insight into the structure, readability and accessibility of the contract and, where appropriate, concrete recommendations for improvement.
Additional services to extend the assessment scope and implement recommendations
In addition to the contract assessment, you can further improve your contract and supplier management capabilities through these following complementary services.
Extend assessment scope
The scope of the assessment can be extended to include the governance execution, ‘on the ground’ problems, and the supplier’s perspective. To further underpin recommendations and priorities, also operational information like invoices and performance reports may be included.
Contract awareness workshop
Engage your contract stakeholders with a practical, one-day workshop that will give them a better understanding of the structure and content of the contract. This will improve insight and understanding between the parties, allowing them to better achieve business objectives.
Contract optimization
In close collaboration with stakeholders within the organization and the service provider, we can undertake a project to improve the quality of the contract along the four evaluation criteria, so that the contract is better shaped to support realization of business objectives and supplier relationships.
Develop future strategies
In case the contract is not future proof, we can support you in creating a clear sourcing strategy and contracting journey which will give a clear picture of future options including critical activities and milestones.