Have you completed your proper due diligence on your business contracts? It’s crucial to plug the holes in your business contracts before you find yourself sinking.
I recently had the opportunity to have a weekend Barramundi fishing up near Townsville in a place called Giru, where I stayed at the Giru International Hotel (the best kept secret of Barramundi fishing!).
When I get the rare opportunity for a weekend free from work I go up there to relax and catch some huge fish. Normally I use a specialist tour guide who knows all the hot spots and has a decent boat. However this time I arranged with a friend to use a little tinny he had acquired for free, which would save us some money.
“Brilliant!” I thought.
What we discovered was that it leaked like a sieve and with 20ft saltwater crocs cruising past us this became pretty nerve racking, so we quickly called it a day and found ourselves back at the boat ramp after just 15 minutes.
Now this made me think about a recurring issue I have been discussing with several organisations – contract leakage. Leaking boat . . . leaking contract . . .yes I know I have a strange thought process!
Many organisations, or their procurement departments, work very hard to identify the best suppliers and do a sterling job negotiating best value. Contracts are carefully put in place . . . and then forgotten about.
The need to monitor and review contracts carefully and ensure these are applied at the time requisitions or purchase orders are being raised by users is crucial. All too often contracts are simply forgotten or left to rot in some filing cabinet or bottom drawer.
So to help these organisations increase the proportion of spend “under management” and “on-contract” it makes sense to improve visibility and control of contracts throughout the life cycle and ensure the contracts are being fully utilised when buying goods and services.
Companies could make far better use of their contracts by implementing a system that has the following attributes:
- All contracts held in one central repository
- Visibility of all elements relating to the contract (status, contract type, codes to categorise spend, contract title, contract lots, etc)
- The ability to hold documents associated with the contract (soft copy, confidentiality agreements etc)
- A contract management system that automatically collects purchase data and delivery activity for supplier analysis.
- The ability to define a contract manager with periodic review with automatic reminders of review or appraisal needs.
- User definable dates and events (contact milestones, review dates, auto renewals etc)
- Total transparency
- Full contract KPIs, available real-time, of spend by contract, percentage complete by contract, supplier performance and organisational activity vs commitments
So if you don’t want to find yourself swimming with the salties it’s time you looked at putting in place a Best-in-Class web-based contracts solution.
I know that next time I will be contacting the professional tour guide – because for one it’s safer and two it actually delivers fish!