Are your contracts still fit for purpose?
Prior to the Brexit, Covid & Ukraine challenges contract management and adherence was challenging enough, with the responsibilities split across multiple departments and stakeholders. As teams have become more remote so the links between them have changed. More businesses are now reviewing wheteher their contracts are still fit for purpose in 2022.
Companies are now starting to see that many of the contracts negotiated prior to these events are no longer fit for purpose. Add to this the additional challenge of managing contract compliance and renewals through outdated spreadsheets and the chances of waste are greatly increased.
Most businesses have had to adapt their ways of working over the last 2 years. This is allowing for more flexibility where their teams work, when they work and how they interact with everyone. Whilst these changes have led to a new way of working for many, it is only now starting to be reflected in the contracts we have with our suppliers and partners.
Do you still need the same contracts?
Most contracts are negotiated with break clauses to protect both parties in the event of poor service or significant changes. Many contracts also feature automatic changes to rates and terms if the contract “rolls over” after the agreed terms and dates, which can result in considerable cost increases.
Ask yourself / your procurement team if you are still receiving value from your contracts that were negotiated when the working environment was so different. If your capital equipment and service needs have changed do you have the right suppliers in place to manage this or should you be going back to market?
One of the most common challenges post-pandemic we have been asked to review is around courier spend. This is often based on delivery volumes negotiated before the most recent lockdowns and the seismic shift to online retail.
What is good value in a contract?
Here at Ebit we have talked of the value of Intelligent procurement for many years, focussing on the entire proposition offered by suppliers and partners. Whilst we are judged on the savings delivered the best results for our clients have been the projects that have allowed them the most flexibility during these changeable times.
Look at what value partners and potential suppliers can add alongside their offer for competitive pricing. We have worked with multiple clients to shift ensure this added value is not only talked of but implemented. This is essential to ensure that maximum value is achieved.
Your contracts may benefit from a review and restructure to ensure that they best serve your business in 2022. This allows you to continue using the suppliers that you are comfortable with whilst ensuring value is delivered today.
How do you review your spend?
Do you know what you are spending across your indirect categories? How can you benchmark your spend to ensure you are achieving market rates?
Many organisations have found that they can no longer keep this information up to date using spreadsheets. We have seen many cases where there is no centralised control or responsibility for this and, as such, the ball is often dropped.
For procurement teams with limited access to indirect category market information and rates it is hard to know where to focus your efforts to deliver the best return on bottom line costs.
Ebit can help
We have expertise and experience across many industries and all indirect spend categories. If you are looking for support on a single project or need to bring in a fully operational procurement function we can quickly move to add value to your business.
We don’t know what your challenges are, every client we work with is different. So are we. We take the time to understand your business and the challenges you face before bringing our expertise and market leading data to the table. This ensures you are able to make your contracts fit for purpose in 2022
Our contract management software can provide an easy to use solution to expired contracts and un-defined spend across multiple business sites and functions, giving you a single clear view of any exposure to no-compliance.
If you don’t have internal capacity to conduct a review of your supplier contracts, we can help. Our contract management software will take care of contract governance for you. Contact us to find out more.