Contract management focus intensifies in the downturn

10 May 2009

11 May 2009

Rigorous contract management is crucial for tackling the financial pressures of the recession, according to the latest SM100 poll.

In the new survey, 56 per cent of respondents said they had increased their focus on monitoring deals during the economic downturn.

And many of the 44 per cent of buyers who reported no increased focus argued that consistently high vigilance was important, regardless of wider economic factors. Others said contract management should be an integral part of everyday business.

The poll followed a separate survey of 170 companies by Aberdeen Group last month, which found 40 per cent had placed a "significantly increased emphasis" on monitoring deals amid economic gloom. A parliamentary Public Accounts Committee report released last month also emphasised the importance of good contract management in the public sector.

Several buyers told the SM100 good contract management was important "now more than ever".

Christian Verity, procurement manager at civil engineer JN Bentley, said: "Adopting a supplier performance mechanism is key to achieving an effective supply contract. We use a quantitative and qualitative measure of service, complemented by specific comments from buyers and anybody involved with the contract. It has been invaluable in improving service to our sites in times of need."

Purchasing manager Martin Wakelin said his company was working to ensure contracts were "reflective of current business conditions".

He added: "Material price clauses are increasingly used to protect from the highs and lows of a fluctuating market. Meetings with key suppliers are more frequent to discuss performance."

Tom Woodham, director of consultancy Crimson & Co, agreed: "This is an excellent time to check that as a purchaser you are getting what you contracted for."

Adam Smith, purchasing manager at manufacturer Morgan Ceramics, said the company was working with suppliers to ensure contracts were productive for both parties.

"We are trying to squeeze more out of our suppliers to ensure maximum value in uncertain times," he said. "We are not being punitive and are able to offer suppliers favourable incentives to ease some of the pressures they may be facing."

SMmay2009

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