05 July 2007
Quick savings expectations can lead to poor purchasing contracts, experts claim.
Paul Carter Hemlin, director of commercial and contract management consultancy Blake Newport, said the struggle to declare savings by the end of a designated quarter often means the intricacies of some contracts are neglected.
"We looked at a deal recently where we were considering service levels before we had agreed what the services were. That has got to be wrong."
According to Howard White, commercial director for Orange Business Services, such financial pressure means limited time to forge a relationship with suppliers.
He said this "commodity approach" to buying means "you're trying to recover from that situation post-contract, which makes the continuity of people in contract management before and after even more important."
Speaking at a round table event last month, the experts agreed there was a need for more communication where procurement and contract management were separate. Heather Rodgers, head of procurement and supplier relationship management at Centrica, said her department had been renamed and brought the two functions together. She added the procurement and supplier management team have realised how important it is to lay the groundwork for a long-term contract.
"They've changed the way they sometimes conduct negotiations as they have that better understanding of the whole life cycle," she said.