Negotiation and Contract management is more than just contractual compliance, contract in business are the main method of defining the relationship between the buyer and supplier, ensuring that buyers can realise the savings and benefits negotiated during the sourcing process.
Effective commercial contract management extends much further than reducing immediate cost to a business through negotiation or agreeing contract terms with a supplier. Enveloping a much wider set of disciplines designed to manage all aspects of supplier commercial relationships, developing more effective, mutually beneficial commercial arrangements with compatible suppliers.
As with all aspects of procurement improvement, effective commercial management relies on robust processes to navigate each crucial stage. Starting with initial contact with a potential supplier through to contracting and ongoing relationship management, maintaining a strong commercial standing will ensure not only upfront cost reductions are achieved but also address the longer term Total Cost of Ownership (TCO).
Although the first time some companies discover contract management is when they are given a complex contract by either a customer of a supplier, this is but a very small part of contract management. SCB Procurement have extensive expertise in all aspects of negotiation and contract management, we are able to assist your company in many different ways from individual contract reviews and negotiation through to developing a fully bespoke commercial strategy to help you identify and realise opportunities for cost and process improvement throughout your supply chain.
SCB Procurement Solutions develop bespoke contract management solutions tailored to your unique business requirements, we incorporate all areas of the supply chain and wider business into the development process to ensure all potential areas of improvement can be captured and exploited.
Through analysis and developed insight into our client’s individual business needs we are able to build clear and aligned objectives and integrating them into a broader business wide or supply chain strategy. This allows for improvement to the underlying infrastructure and supply chain development which delivers consistent long term cost savings.
Effective negotiation plays a vital part of any sourcing or contracting activity, through extensive pre-negotiation research, it is important to understand the leverage the business has to negotiate strongly achieving the best available deal.
Developing a robust terms and Conditions or bespoke contractual agreements to ensure you are always trading under the most effective terms achievable to manage any associated supply chain risk.
Understanding and guiding the business on the most cost effective route to market working with both external and internal supply chains to minimise waste and process inefficiencies. This enables the business to work with greater emphasis on LEAN processes ensuring products are available when required without over reliance on stock.
Studying and understanding industry standard and competitor costs is an effective tool to assist in the optimisation of the price point of a product. The results of this analysis allow for focus to be placed on key areas to drive down cost.
Reverse engineering bought in components and sub-assemblies to greater understand the cost makeup of the product including material, labour, logistics, overheads, utilities etc. this enables for stronger cost negotiations with suppliers and heavily used in Automotive and Aerospace.
Building an understanding of how different currencies/exchange rates affect the business and tailoring the supply chain to minimise these effects.
Historically small business generally on the wrong side of negotiations or contractual terms with larger organisations demanding preferential agreements.
Although SMEs may appear to have little power in negotiations, the effective use of robust contract management processes can help reduce the gap. Contrary to the belief that SMEs need to be subservient and accept the deal they are given, the opposite is more realistic. Large organisations are keen to work with SMEs who manage their contractual risk, suggesting a more professional approach than other options.
Working with our clients SCB Procurement Solutions to provide the right tools and equip all relevant stakeholders within your business with the knowledge and skills they need to understand cost drivers and the effect any changes to strategic purchasing may have on margins, customer experience and delivery.
In tandem with negotiating more advantageous contracts and ensuring supplier arrangements are working harder for the business. This may include exploring global trading arrangements to help SMEs secure a more competitive cost base.
Reducing waste by streaming processes and ensuring organisations are not paying for materials or processes which they don’t need within the context of meeting their objectives.
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