There’s plenty of value to be gained during the lifetime of existing deals so long as the contract doesn’t just sit in the “top cupboard”.
That was the advice from Jonjo Hobbs, Capita commercial director, at a presentation at the CIPS Annual Conference in London on how to unlock value through effective contract management.
There’s also plenty to be gained if you can get involved upfront and understand the objectives of the business. Presenting alongside Hobbs, director of MC2 Procurement Mandy Chippindale (pictured left), said it is important buyers are included at the very start of shaping the deal. “We need to be engaged at the business case stage to ensure it can be delivered. We need to say, ‘we’re not here to do procurement’ but to deliver the business case. Understand the customer’s needs and serve them better than anyone else, that’s where we need to be.”
“Focusing on achieving the targets the organisation wants to achieve is how to access real value,” agreed Hobbs.
Both said having good relationships with the relevant supplier and stakeholders concerned results in a better deal over the life of the contract. “Move from control to collaboration with suppliers to get more value,” said Hobbs.
He said while successful contract management means different things to different organisations it requires a number of common components:
• Understanding – a true understanding of your organisation’s ambitions and starting point;
• Buy-in – reciprocal support and buy-in from the organisation. “You may need to do a segmentation exercise to identify which contracts you will concentrate on and which stakeholders will be involved, he said”;
• Capability – people who understand how to drive collaboration internally and externally;
• Tools – suitable processes and the right technology to support your programme.
“Strong contract management drives financial performances, strategic value and risk management. Focus on what that contract is trying to achieve and remember that,” he said.