Contracting tools that adds structure, delivers value and saves money
In the article “How Contracting Can Help Companies Win in a Low Prices Commodity World”, we said that getting the right tools enables a structured approach. So what?
Being structured is what makes us successful in our busy private lives. Imagine that your friend surprises you with a call from the airport – there is a 3 hours overlay to catch up. You don’t want to miss this opportunity. Why wasn’t this known yesterday? You dash to the car, drive to the airport only to find a traffic jam on the freeway and you waste 2 hours before returning home in a huff. Rushing meant you had not checked traffic conditions. Unusual timing meant you did not consider the train. Looking at the diary – you could have changed a meeting later in the week to coincide with a client call near the airport and been efficient. If only!!!
Bottom line is that we’ve made our private lives structured with simple tools to manage our constraints in an affordable manner. This not only keeps us efficient, it keeps us sane.
In your business life, a similar structured approach to contracting can provide the benefits in managing the constraints of time, risk, uncertainty and with calmness. It will provide your business with the lowest cost insights to make good decisions in expected value outcomes.
How does your business rank in being structured with contracts? Ask yourself the following questions:
- Where are contracts stored? Are they complete with amendments and is it the last version?
- Do you know when a contract is about to expire?
- Do you know which contract is running ahead/behind in your revenue/cost expectation?
- Do you value your contracts with a risk assessment or just total contract value?
- Do you know how the commodity prices impact your finished products? Electricity, gas, steel, oil can widely fluctuate and will have a margin impact. Are you measuring the risk and have you options for mitigating? Is the mitigation working?
- How are your contracts appraised and monitored? Is the appraisal shared and is action taken?
- Do you work with baseline standards such as standard terms and specific terms as add-ons trapping specific risks?
- Are you triggered to get a signed contract back from your customer and are the terms still the same?
Contracting tools will automate the routine in a cost effective manner and allow the process to focus on the major areas of concern. There is no one size fits all, therefore a different blend of commercial & contract management enablers of process, people, content and tools. Check out if you organisation has the optimum blend of enablers for your organisation!