I used to think Contract Management was almost entirely risk mitigation. How do you ensure you don’t miss your obligations? Contract Management. How do you ensure good supplier performance? Contract Management. How do you maintain compliance? Contract Management.
Now this is clearly not right, but it was borne of my experience at the time which was public procurement. The nature of the beast is just overwhelmingly about fire-fighting – contract expiries, poor performance, ad hoc change, disputes etc etc. The scope for adding value almost didn’t really occur to me as a key part of it. I’d never had the chance to consider it.
But even beyond adding value, I see CM completely differently now. I see it as control. From my perspective, the job breaks down into three parts: fire-fighting, routine (reporting etc) and adding value. Depending on your organisation, your portfolio, your priorities and to an extent your skillset, the percentage of time you spend in each area could vary substantially.
It’s not particularly mind blowing to say that we should all be looking for ways to spend more of our time adding value than in the other two. The key question is how do we do that? The eagle-eyed among you may recall I posted a proposed workshop to take a look at the activities that fall into these categories and estimate a percentage workload. That’s still a key activity in my view but the overarching solution will always be control.
It’s a bit ethereal to just say ‘get control’ and doesn’t sound particularly practical. Like shouting at a football team to score more goals, it’s not like they weren’t trying to do that in the first place.
So, what does control mean in CM? It’s the collective act of putting in the right tools and right processes to give you the best possible view of the status of your portfolio in any given moment. It also means discipline – unfortunately, you’re going to need to enforce some discipline too. CM is a team sport and you can’t single handedly change your organisation’s approach to change and reporting for example.
Look, we all have that board member who wants a different cut of the monthly reports every time it gets produced. But it’s a great example of friction and the need for discipline.
So what do we do, we start by planning. Contract Management Planning is so underrated as an exercise. If done as a collaborative exercise, it enables you to determine how you’re going to manage your contract, prioritise your resources and critically in my view, document that approach for the next person. This is key for big organisations with a lot of churn.
Within your plan you cover the key elements of CM as they pertain to your organisation – obligations management, dependencies, performance, spend management, relationship management, assurance. Set it up proportionately and you have a powerful document.
Implement the right tools to deliver on your plan. If you’re fortunate, your organisation has a good ERM system, implements Power BI and is starting to implement AI. The rest of us can make do with excel and some conditional formatting.
This isn’t an insignificant amount of work. In fact it’s an ache. But now you’re set up, you’ve got a plan, you’ve got a process, you’ve got the tools and you have control. You’re not being blindsided, there’s fewer surprises and a lot less friction.
So what’s that sound you can hear? It’s opportunity knocking. Every hour of fire-fighting and frictional activity you have removed can now be used to add value.
We’ll return to adding value another time and what it looks like but for now, take this away.
TAKE BACK CONTROL
Be fiendish about it. It is your contract, it’s yours to operate smoothly. Nobody needs the chaos of fire-fighting, life is too short. If you have control, you can begin to really demonstrate the value of the procurement/contract management department and put your skillset to use in the most rewarding of ways.
Kevin Smith
Managing Director
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