In his recent book Global Supply Chain Ecosystems, Mark Millar wrote, “…today’s supply chains encompass complex webs of interdependencies, frequently spanning the globe, designed and deployed to optimize critical attributes – such as speed, agility, and resilience – that drive competitive advantage.” That’s where contract management strategies can make all the difference.
His point plays out on a daily basis through the contract management strategies and practices in many organizations. Because our supply chains are no longer linear or consecutive, we may be buying from and selling to the same company at the same time. This puts our organization in the role of being simultaneously both buyer and supplier.
While there is no problem with this, it does raise complexities for the procurement and sales teams if one or the other is unaware of something going on. I can honestly say I have seen this happen firsthand.
I was involved in a project that had reached a particularly heated point in supplier negotiations. To our great shock, the CEO of the supplier called his business development contact at our company and threatened to pull their business if the negotiations did not take a different direction. While that may or may not have been worthwhile for our organization, it would have been much better if no one had been surprised by the phone call.
If procurement and sales have an opportunity to store their contracts in the same solution, it makes it that much easier to screen for “double agent” suppliers. The timing of negotiations or customer service issues can be handled more purposefully if everyone knows at a high level what is taking place between the two companies. While sales information is often tracked in a CRM solution, and procurement has both contract management and spend analysis to consult, it is rare that both groups can get a big picture view from one place. An expanded use of contract management presents that opportunity.
When you talk to procurement about contract management strategies, we assume you are talking about the contracts we are responsible for. It is easy to forget that our sales team is on the other end of that line for different companies – at least until it is the same company at the other end of the line.