Procurement-Contract_Management_v2
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The document outlines a procurement training program focusing on contract management and supplier performance. It emphasizes the importance of effective supplier management for organizational efficiency and profitability, while also detailing key elements such as a supplier rating program and the role of a contract manager. The training aims to equip participants with skills to measure supplier performance and improve contract management processes.
Procurement-Contract_Management_v2
- 1. Procurement Training - Contract Management DELIVERED BY: BSS Management Consultancy Visit www.businessservicessupport.com Tel: 0845 226 4315
- 2. OBJECTIVES PROVIDE PARTICIPANTS WITH SKILLS FOR EFFECTIVE CONTRACT MANAGEMENT PROVIDE A BASIS TO ENABLE THE ORGANSIATION TO ACHIEVE STRATEGIC PROCUREMENT GOALS PROVIDE PARTICIPANTS WITH AN INSIGHT TO THE LEGAL, HUMAN & COMMERCIAL ISSUES ASSOCIATED WITH A LEGALLY BINDING CONTRACT PROVIDE PARTICIPANTS WITH STEPS FOR DESIGNING & DEVELOPING ROBUST PERFORMANCE MANAGEMENT SYSTEMS 2 copyright© to Business Services Support Limited 2011
- 3. STRUCTURE & OUTLINE Supplier performance is crucial to an organisation A supplier that performs well can: Help your organisation be more efficient Produce higher quality products or services Reduce costs, and increase profits A supplier that performs poorly can: Disrupt your operations Make your organisation fail in the eyes of our customers Increase your costs, and threaten your profits Managing the performance of suppliers, then, should be a strategic focus of every organisation Yet, it is unbelievable how many organisations fail to recognise the importance of supplier management 3 copyright© to Business Services Support Limited 2011
- 4. STRUCTURE & OUTLINE Very few companies have formalised systems in place to measure their suppliers’ performance And fewer companies have a strategy to motivate suppliers to improve their performance This course will teach you how to measure your suppliers’ performance and how to achieve optimal supplier performance After this course, you will have enough knowledge to implement a supplier measurement and management program at your organisation 4 copyright© to Business Services Support Limited 2011
- 5. KEY OUTCOMES CREATING AND DEVELOPING A TEAM CULTURE LEGAL & COMMERCIAL AWARENESS COMMUNICATIONS STRATEGY NEGOTIATION SKILLS DURING THE PROCESS 5 ONGOING MONITORING OF PERFORMANCE copyright© to Business Services Support Limited 2011
- 6. PEOPLE IMPLICATIONS? ROLE OF THE CONTRACT MANAGER: Once a contract is awarded, the contract manager will agree budgets and timescales, and gain approval of costs and processes. Throughout the life of a project the contract manager will act as the main point of contact. The exact nature of the work will depend on the size of the employing organisation, but key processes would involve the following: Meet with clients to gain a full understanding of their business and needs; Present project proposals to client; Maintain communications with in-house departments and external contractors; Make improvements to contract processes and procedures 6 copyright© to Business Services Support Limited 2011
- 7. LEGAL IMPLICATIONS? 7 COMMERCIAL VS LEGAL IMPLICATIONS: There are literally thousands of different clauses that can be applied and most are dependant on the type of contract Contract clauses are usually small statements within the contract. These clauses can work to the detriment of other statements made within the contract and can be used to limit any liability or obligation on the part of the person offering a service In many contracts there are clauses known as penalty clauses These clauses are designed so that when a party breaches a contract a financial penalty can be applied One of the main reasons behind this type of clause is that if a contract is breached then the non breaching party will be able to claim a financial penalty without taking the dispute to court copyright© to Business Services Support Limited 2011
- 8. WHY CONTRACT MANAGEMENT? 8 Three Key Elements: Measuring your suppliers’ performance involves implementing a supplier rating program at your organisation A supplier rating program can be simple or complex, manual or electronic. You will need to decide the option that works well for you We’ll call SUPPLIERS, RATERS, and PERFORMANCE measures the three key elements of a supplier rating program The suppliers, raters, and performance measures that you decide upon for your supplier rating program are critical to the success of your program We will talk about each of these three key elements now Suppliers Raters Performance Supplier Rating Program copyright© to Business Services Support Limited 2011
- 9. WHY CONTRACT MANAGEMENT? ELEMENT ONE: SUPPLIERS When selecting the suppliers to evaluate, you have to determine a reasonable number of suppliers It is usually not worthwhile to evaluate suppliers who receive few orders from you or with whom you do not spend a great deal of money Whatever number of suppliers you choose, the group of chosen suppliers should include: (a) Those suppliers with whom you spend a lot of money (b) Those suppliers who have the most impact on your operations Determining what is meant by "suppliers with whom you spend a lot of money" and "suppliers who have the most impact on your operations" is subjective and can vary from organisation to organization Here are some guidelines to help you determine the suppliers who meet these criteria in your organisation Suppliers 9 Raters Performance Supplier Rating Program copyright© to Business Services Support Limited 2011
- 10. WHY CONTRACT MANAGEMENT? ELEMENT ONE: HIGH SPEND SUPPLIERS For spending, let’s default to the time-honoured 80-20 rule As it would apply to suppliers, 80% of your spend is with 20% of your suppliers Find out your total spend and the amount you spend with each supplier Sort your list of suppliers from highest spend to lowest spend. Is the spend with the supplier at the top of the list equal to or greater than 80% of your total spend? If not, add the spend with the first supplier to the spend with the second supplier. Is the sum equal to or greater than 80% of your total spend? If not, add one supplier at a time (in order) until the combined spend is approximately 80% Your supplier rating program should probably include these suppliers unless your company does not follow this pattern and it takes more than 20% of your suppliers to account for 80% of your spend Suppliers 10 Raters Performance Supplier Rating Program copyright© to Business Services Support Limited 2011