NB: today s presentation is by me, all opinion & views expressed are mine, or as referenced not PwC s
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- Juliana Jones
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2 Hi Matt Turner: mattggturner on LinkedIn Worked in Procurement forever Worked in Procurement roles in Automotive, Retail & Fashion, and Utilities Then became an IBMer Procurement & Supply Chain consulting: Healthcare; Oil & Gas; Utilities; Local Govt. Part of PwC Wales & West Commercial Assurance: only one in the (growing) team not a qualified Accountant or Auditor NB: today s presentation is by me, all opinion & views expressed are mine, or as referenced not PwC s Takeaway: Good to meet you!
3 I am here to share experience. I refer you to lots of great slideshows on this subject on LinkedIn / Slideshare Reference sites: CIPS, Supply Management, Europa.eu, CLM (Contract Lifecycle Management) software vendors. One clarification: this about Supply contracts, not Sales OK? Any questions on what we are talking about? Takeaway: you will not find this on slideshare!
4 Before we get into process it doesn t operate in a vacuum Vision: Procurement Strategy Depth: Maturity of Procurement integration Senior Sponsorship? Integrated or baton passers? Where does Contract Mgt fit? Do they have procedures? Is Procurement role defined? Experts? Power: relative power of Buyer & Seller Takeaway: Buyers power is part of the equation Supplychainquaterly.com
5 Requires a very different mind-set vs striking a deal Definition is fairly new Technology has been a driver: can sell CLM on the back of an ERP 20 years ago it was a back office admin role Attributes of good Contract Less Managers? More Takeaway: needs consistency to deliver. Management by deal-makers is a concern
6 Key Stages of Contract Mgt? Planning Sourcing Delivery Takeaway: The middle bit has always happened: Contract Mgt adds rigour
7 Key Stages of Contract Mgt? Planning Preparatory stage, typically driven by contract renewal date or project deadlines Key risks: Renewals get limited resource Baton passing Power not considered Longer-term implications are not considered (software) Risk is identified, but mitigation overlooked It s not taken seriously Sourcing Defines what is being bought and how. Key Risks: Poor definition of evaluation allows other agendas to influence decision Lack of understanding of regulations increases risk of challenge Insufficient timescale for negotiation forces buyers hand It s emotional Delivery Ensures full contract value is delivered & terms complied with Key Risks: Poor handover / continuity as we move to delivery and people change Poor data & analytics: Ltd KPI tracking and portfolio views Poor record keeping: contracts change, parties & products change where is the contract? It s over Takeaway: Only Effective if Procurement actively engages the business
8 Contract Management: CIPS Model (edited) Planning Planning & business case The Team (beyond Procurement) Contract strategy Risk assessment Exit strategy Post Award Contract Management plan
9 Contract Management: CIPS Model (edited) Sourcing Specification and requirements Form of contract Pre-qualification, qualification & tendering procedures Appraising suppliers ITT documents Evaluating tenders Negotiation & rules Award
10 Contract Management: CIPS Model (edited) Delivery Change Management Service delivery Relationship management Contract administration Ongoing Risk Contract closure
11 Summary: typical areas overlooked Compliance with post-award Procedures Expertise where EU Regs are involved Mitigation of Risks Making Contracts accessible Delivery Phase is often more likely to be Cinderella: Contracts get lost Contracts expire without active renewal Contracts expire & flip to evergreen supplier terms Changes are signed off on change notes without contract Delivery phase must also maintain relationships & performance Lack of monitoring: contracts fall out of use value leakage Lack of analysis: to consolidate common contracts / suppliers Limited: monitoring of change in Supplier risk
12 Final Point: Why? Because you get 5 to 20% savings moving from Poor to Good Contract Management Questions
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