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.

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

It's Their Fault That We Don't Collaborate

Posted by Tim Cummins

Apr 5, 2016 6:39:59 PM

Supply Chain Digest recently reported on barriers to collaboration between vendors and retailers. In a finding consistent with IACCM's annual surveys, they discovered that 'it's not me who fails to collaborate, it's them'.

Many may be surprised that most major retailers would ever think of themselves as 'collaborative' with their suppliers. In many cases, there is a massive gulf in relative power and the media headlines frequently suggest that this imbalance is something that the industry exploits. If commercial terms are anything to go by, there appears little room for collaboration. The research points to lack of trust as a fundamental issue – but of course this is generally a symptom, driven by other factors.

There are clues to those other factors in some of the scores. For example, the highest ranked difficulty identified by retailers is how to apportion gainshare, whereas for vendors the top challenge is the lack of collaborative skills exhibited by their customer. Vendors also see real problems in the availability of tools, data and executive support – this last item being perhaps linked to the fact that they see little evidence of a good return on investment from collaboration.

Ultimately, it is most likely the absence of any apparent financial benefit that is killing collaborative relationships. The fact that the retailers see the allocation of benefits as the biggest issue speaks volumes for industry behavior and attitudes. It confirms that for many, it is better to generate no benefit at all than to face the prospect of sharing that benefit with a vendor.

In an industry where margins are low, collaboration is a major source of cost reduction and innovation. But right now, a transactional mentality is in many cases destroying the possibility of value-add negotiations. Case studies have shown the opportunities that exist, especially when collaboration is handled across a category portfolio, not just with individual suppliers. However, this requires far more expansive thinking and a focus on value rather than price - something that the research shows is a distant dream for many in the retail sector.

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Topics: procurement, sourcing

Contract management is NOT a sub-set of Procurement

Posted by Tim Cummins

Nov 24, 2015 4:51:30 PM

It’s not uncommon for business functions to lay claim to ownership or proficiency in another domain – but that doesn’t make it right.

In the case of contract management, the procurement, legal and project management functions are among those who assert it is ‘theirs’, that it is in some way a sub-set of what they do. That is, they make that claim until things go wrong – at which point it conveniently becomes someone else’s fault.

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Topics: procurement, sourcing, commercial management, supply chain management

Category Management and supplier relationships

Posted by Tim Cummins

Nov 18, 2015 4:59:21 PM

Category management is now a widespread approach within supply management. For some, it is about aggregation of spend and achieving lower prices. For others, it is about increasing the expertise and value delivered by their procurement function. As with so many initiatives, it is often hard to tell what precise benefits have resulted.

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Topics: sourcing, relationship management

Are your negotiations eroding value?

Posted by Tim Cummins

Nov 4, 2015 1:57:04 PM

IACCM research is showing a direct correlation between attitudes to risk and ease of doing business. Both these elements are significant in our approach to negotiation and in turn impact the quality of business relationships – and thereby affect results. 

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Topics: negotiation, contract /commercial management, sourcing, relationship management, commercial management, performance management

The worst company to do business with

Posted by Tim Cummins

Oct 22, 2015 5:24:15 PM

I was reading an article on CNN that ranks the world’s worst (and best) airports. Travelers ranked them on criteria of comfort, convenience, cleanliness and customer service.

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Topics: sourcing, relationship management, contracting excellence, organization & people

World trade and the role of trust

Posted by Tim Cummins

Oct 16, 2015 12:29:52 PM

The collapse of the U.S. / EU safe harbor provisions covering transfers of personal data is a reminder of how fragile key trading principles can be. It is especially pertinent at a time when major cross-regional trade agreements are being negotiated and signed.

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Topics: sourcing, relationship management, international, risk management

Generating value from suppliers

Posted by Tim Cummins

Jul 1, 2015 11:16:12 PM

Organizations continue to disaggregate. The traditional 'integrated enterprise' has eroded and current thinking is that organizations are more agile, more efficient and more creative if they use external suppliers and contractors, rather than invest in large-scale 'owned' resources.

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

A need for self-surgery

Posted by Tim Cummins

May 24, 2015 4:36:58 PM

25 years ago, management guru Gary Hamel was telling CEOs about the need for self-surgery. Facing the chill winds of globalization, he explained their need to urgently reassess many of the structures and policies that had come with their former greatness. Among these were the need to rethink the management systems that had been fundamental to their success, such as operating with multiple profit centers and promising 'employment for life'. Practices like these stood in the way of lean, efficient operations and collaborative, skill-based delivery systems. They faced the choice of self-surgery or the mortician - and in the subsequent 25 years, more than half the Fortune 500 have disappeared or left the list.

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Topics: contract /commercial management, procurement, sourcing, international, legal, organization & people, supply chain management

The disappearing world of Procurement

Posted by Tim Cummins

May 19, 2015 8:31:12 PM

Too many procurement groups are on a path to nowhere. They are missing the golden opportunities being created by today's dynamic markets.

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

Does Commitment Matter To You?

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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