Commitment Matters

If you are a professional in Contract & Commercial Management, committed to achieving the best possible outcomes from negotiations with all your trading relationships, then ‘Commitment Matters’ is the perfect source of regular articles and posts dedicated to helping you achieve that goal.

Facts, opinions and informed judgment

Posted by Tim Cummins

Feb 22, 2017 5:15:47 AM

When it comes to decision-making in business, what’s of greater value – a person with facts or a person with opinions? The answer, of course, is something of a blend. Good decisions often rest on the use of informed judgment.

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Topics: procurement, organization & people

The impact of terms and conditions

Posted by Tim Cummins

Feb 15, 2017 6:54:57 AM

Anyone involved with public procurement knows that the terms and conditions of contract are often onerous and inflexible. Past IACCM research indicated that a substantial price premium results from these terms – essentially, a cost of risk aversion. We also know that the rigidity of contract structure can contribute to costly failures and overruns.

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Topics: procurement, risk management

Procurement – it’s time for a re-birth

Posted by Tim Cummins

Feb 8, 2017 4:54:18 AM

There are growing voices that predict the death of Procurement. Faced by exciting new technologies, plus the opportunity to dramatically expand outsourcing (for example to an increasingly rampant company such as Amazon), such predictions are easy to understand. But are they right?

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Topics: procurement

I’m important – but I can’t demonstrate my value

Posted by Tim Cummins

Feb 1, 2017 5:21:12 AM

In a recent webinar for leaders of procurement, commercial and contract management functions, over 70% indicated that they feel under pressure to deliver more business value. Just 12% felt confident that they were already on a path to greater stability and success.

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Topics: procurement, performance management, organization & people

Is Procurement a function or a process?

Posted by Tim Cummins

Jan 14, 2017 11:04:32 AM

Are Supply Chain, Procurement, and IT on different Planets from Category Management and Operations?

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Topics: procurement, organization & people, contract management

The top table beckons … perhaps

Posted by Tim Cummins

Jul 14, 2016 4:54:54 AM

Tania Seary of Procurious is the latest in a long line to suggest Procurement should be 'at the top table'. Her article, Headed for the C-Suite, wisely suggests that a pre-requisite is to demonstrate relevance to business objectives and to do this through ' a new focus on key performance indicators'.

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Topics: procurement, contracting excellence, supply chain management

Who wants to report to the CEO?

Posted by Tim Cummins

May 12, 2016 7:17:39 AM

"Why not be the CEO?'

The mood at this week's IACCM Europe Conference was optimistic - at times one might almost say euphoric - as delegates explored the changes and opportunities that lie ahead. The theme of the event was 'transformation', exploring the impacts of digitization and the dramatic shifts that are implied for contract managers, commercial managers, procurement and legal.

Among the many quotes (and I will share more over coming days), one came during an executive workshop on 'Accountability & Leadership'. We were discussing the findings of IACCM's recent 'Future of Contracting' study, which reveals a widespread belief that within 5 years, many commercial and contract management groups will report direct to the CEO (shifting most notably away from reporting to the General Counsel or Chief Financial Officer). There are many reasons for this, but among them are the fact that commercial policies and practices must be functionally independent and the belief that, increasingly, contracts and commercial must be at the heart of business integrity, operating almost as a 'conscience' for the organization in its trading relationships.

As the conversation began, one delegate immediately challenged the idea that reporting should be to the CEO and said: "Why not be the CEO?" Conversation then turned to the question of how many of today's CEOs have benefitted from a contracts or commercial background, or experience in this role. The number of examples that arose would surprise many, but clearly it is not a high percentage. However, how realistic is this suggestion?

There is no question that the contract and commercial role (when implemented well) offers critical insights to every part of the business as well as to external stakeholders. An experienced and high-performing contract or commercial manager has to appreciate the full range of stakeholder interests, the opportunities and the risks they create, and how they might be reconciled. In that sense, it can indeed offer an excellent grounding for today's CEO, dealing with fast-moving, often conflicting trends and views. But today, many would suggest that commercial teams are too strongly focused on identifying problems and lack the optimism and creativity needed to lead a business. It is a fair criticism - but the spirit that was evident in Rome this week suggests that is increasingly an issue of the past.

Delegates recognized that the digital age provides opportunities to embed advanced commercial and contract capabilities within their organizations and to achieve this not through traditional 'review and approval' techniques, but through enabling and empowerment. By focusing on users, the function will steadily transform the business with high-performing, high-integrity trading relationships - and it is this that will turn contracts and commercial practitioners into the CEOs of the future.

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Topics: contract /commercial management, procurement, organization & people

Will I still have a job?

Posted by Tim Cummins

May 11, 2016 4:28:58 AM

Recently, IACCM and Revitas (a leading application provider) produced a webinar exploring the impact of digitization on contracts and contract management. It generated excellent questions - including the perhaps inevitable "Does this mean that people in sourcing and contract management will no longer have a job?"

The answer depends on our readiness to adapt. Digitization brings new discipline to activities that have traditionally been steeped in uncertainty and driven by individual judgment. Contracts are a case in point. They provide variable - and often unclear or ambiguous - guidance to those charged with fulfilling some particular set of obligations or objectives. Digitization promises to standardize terms and conditions in a way that speeds negotiation, production and dissemination of contracts.

Certainly this will empower business users because, before long, they will be able to enter parameters for their deal or relationship and generate a model agreement, with defined negotiable options and parameters. They will also operate independently of political geography or language.

So what is left?

Organizations will still need commercial policies and strategies. The terms they are willing to use must be supported by business capabilities or reflect business needs. The relationship types they offer must reflect business goals and market competition. Performance challenges - and opportunities - must be addressed. There are still many areas where judgment will be required - and those areas are where meaningful jobs will exist.

 
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Topics: contract /commercial management, procurement, sourcing, technology, performance management, organization & people

Be wary of rules – and the behaviors they induce

Posted by Tim Cummins

Apr 28, 2016 4:59:12 AM

The Financial Times this week reported on a study that investigated the behavior and attitudes of New York cab drivers. The research led them to conclude that 'regulatory constraints can prompt sharp practices (including fraud) to recover lost ground'.

When taking passengers to Staten Island or to Newark airport, the ride involves passing through a tunnel and paying a toll. There is a special lane for cabs, to speed the journey. However, in some cases the driver deliberately avoids this lane and instead queues - often for lengthy period - in the 'standard' lanes. The reason, of course, is because the meter keeps ticking and they charge their passenger more money.

The researchers found that this behavior is 50 times more frequent for journeys to Newark than it is for journeys to Staten Island. The reason? It appears to be because cab drivers from New York are not allowed to pick up passengers at Newark - so must drive back empty.

Understandably, drivers feel aggrieved by this regulation, but rather than campaign against it, they take revenge on innocent and unsuspecting passengers. They see no moral issue with transferring their issue with the regulators into cheating the general public.

The Financial Times article makes the point that similar self-justification could apply at many levels. It may subconsciously affect the actions of corporate executives when they face rules that they consider unfair, or which stand in the way of meeting their goals. And for those of us in legal, procurement or contract management, it suggests we must think carefully about the rules we impose and the extent to which these induce negative behaviors by others in the business.

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Topics: contract /commercial management, procurement, performance management, legal

People are the answer … and the problem.

Posted by Tim Cummins

Apr 28, 2016 4:40:50 AM

"The starting point is people". Those are the concluding words in a blog on ThinkProcure.

The author, Stephen Ashcroft, is a procurement leader with an inquisitive and open mind. In his blog, he compares and contrasts findings from a recent survey (which he finds depressing) with the inspirational presentations he encountered at a recent conference.

He found those presentations inspirational because it involved leaders with a vision for the future, of how to ensure that supply and supplier management delivers real value.

He found the survey depressing because it paints a very different picture, of practitioners struggling to do more than negotiate transactional arrangements with (often) the wrong suppliers and then failing to manage their performance. That's exactly what the rest of the business sees - a group that is frequently focused on the wrong thing, or on just a minor element of the overall process. Indeed, recent data from one CEO suggested that today's procurement practices focus on only 20% of the available value.

The optimist in Steve then makes the leap to envisage a future where all those practitioners have seen the light and suddenly they are 'breaking down barriers' and leading an 'integrated approach' across the business. All it needs is for inspired leaders to 'assemble talented Procurement people' and everything will change ...

But situation would not he challenge, it seems to me, is finding those talented people. If Procurement had many of them, surely the current exist? The problem I find is that most people do not have the knowledge or the skills or the tools that are needed to change results - and the majority would prefer to be left alone to do what they are doing. They convince themselves that a) the skills they have really are the right ones anyway and b) if they hold out long enough, these 'visionaries' will go away and take their change agenda elsewhere.

On what basis do I say this? Through a combination of research and on the ground observations. And of course the issues I highlight are not unique to procurement. Our surveys show that around 80% of practitioners believe they have or are acquiring the skills they personally need for the future; and a similar percentage believe their colleagues do not have those skills or the enthusiasm to acquire them.

And if further evidence is needed, it is worth noting that the names Steve cites - those leaders who inspired him - do not actually have background in Procurement. Like many other functions today, the leadership is being recruited from outside. (hence the similar debate for legal groups "Should the General Counsel of the future be a lawyer?").

So Steve, I agree that today the starting point is people. But the challenge is finding the right people for the work of the future - and maybe, just maybe, they are not today's incumbent community.

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Topics: procurement, organization & people, supply chain management

About the Author


iaccm-team-tin-cummins


Tim Cummins

In his role as CEO of IACCM, Tim works with leading corporations, public and academic bodies, supporting executive awareness and understanding of the role that procurement, contracting and relationship management increasingly play in 21st century business performance and public policy.
 

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Commitment Matters is the personal blog of Tim Cummins, the Founder and CEO of IACCM. If you are a committed contracting professional and want to develop your skills and network, take a look at what IACCM has to offer.
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