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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.

Communication takes many forms

Posted by Tim Cummins, President of IACCM, Professor, Leeds University School of Law; Chair, International Commercial & Contract Management | Apr 19, 2017 5:39:33 AM

“Supply chain management is a relationship business,” says Adrian Gonzalez on Talking Logistics. His interview with Brent Nagy, VP of Enterprise Customer Strategy at C.H.Robinson makes many good points – but with a few gaping holes.

The article identifies alignment, synchronization and communication as key to success, focusing on the need to engage stakeholders, both internal and external. Mr. Nagy rightly highlights the diversity of those who must be involved, to ensure seamless understanding: ““First is alignment and really understanding the customer and their needs and challenges, and then synchronizing how the work is done and prioritized. You can’t have one function tripping over the other, each with their own agenda, working in silos…It’s really understanding who owns the relationship, how the relationship from an alignment standpoint cascades down to operations, and having clearly defined roles and responsibilities for everyone involved.”

These comments align well with IACCM’s research, ‘The Ten Pitfalls of Contract Management’. Number one, clarity of scope and goals; number three, engaging stakeholders; number six, relationships lack flexibility and governance; number eight, poor handover to implementation. I also especially liked the observations regarding the need to embrace trading partners rather than hold them at arm’s length: “Treating your trading partners as an extension of your synchronization and alignment process is just as important. If you stop at your four walls and don’t extend it externally, you’re really opening yourself up to an environment where your partners don’t understand your strategy and needs, and if you compound that problem by myopically focusing on driving down prices, you will miss out on [opportunities to achieve greater value and benefits]. You can have the best and most aligned strategies on the planet internally, but if you don’t translate that externally…you’re opening yourself up to a big risk relative to how well these partner networks align with yours.”

While the article recognizes that operating across multi-tiered stakeholder networks is critical and that it often fails, it is rather less assured when it comes to offering a remedy. The answer, it seems, is communication – and ideally that should be face-to-face. But this ignores the realities of today’s business environment – the very environment that has made for such diversity and such complex networks. So relying on methods that worked 25 years ago is not the answer. In my experience, successful companies are tackling this issue in two ways:

  1. They recognise that the contracting process must address a disciplined approach to governance and performance management. This means working together to define approaches to balanced incentives, problem solving, joint working etc. These must be documented and distributed, wherever possible embedded into common software platforms. Without these actions, people will not be in step – the3 network and its interdependencies are simply too complicated.
  2. There is a fully documented communications protocol. Mr. Nagy is correct in calling out how tough conversations are often avoided by use of email or social networking tools. Such an approach typically worsens the situation – it is avoidance of the problem. Within that protocol, face to face meetings definitely have their place, even if they are sometimes undertaken via video conference – an almost inevitable consequence of our global trading relationships.

 

Once again, Talking Logistics has offered a thought-provoking insight to the challenges of undertaking successful business today.

Topics: contract /commercial management, organization & people, supply chain management

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