Successful incentivisation in the contract was a key mechanism for achieving the mutual success of both organisations and aligning success and objectives (James Jacobson, Commercial Manager of the Olympic Delivery Authority).
Incentivisation as a technique can be applied to achieve superior or improved performance for both supplier and buyer and leads to benefits such as lower cost, early delivery, inventory reduction, increased sales, reduced costs, improved labour utilisation, better technical solutions, safer product or higher quality product (CIPS: Purchasing and Supply Management. Incentivisation). This can be achieved through introducing rewards (Archibald, 2008) and mutually agreeing on targets in relation to cost, schedule, quality, safety, inventory reduction, increased sales, reduced cost, improved labour utilisation, or better technical solutions (CIPS: Purchasing and Supply Management: Incentivisation; Hughes et al., 2012).
Return to Developing and Managing Contracts topic.
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