A 30.000 ft Health Check on Your Commercial & Contract Management Framework

A free self-assessment

In the article “How Contracting Can Help Companies Win in a Low Prices Commodity World”, we provided you with a view tips and thoughts to improve your Commercial & Contract Management Framework.

Not all contracts/deals are of equal importance
Deal teams benefit from being cross-functional
Maximizing value by managing your contract portfolio
A structured approach with the right tools avoid waste

We offer you an unique opportunity to assess your actual Commercial & Contract Management Framework through a free test of 20 high level questions we have prepared for you. We trust it may trigger some reflections for change.

Good luck!

IF you liked the assessment and want to get more into the weeds; check out our Benchmarking Study offering.

Welcome to your Commercial & Contracting Health Check

Do you manage all contracts more or less in the same way?

Criteria is set on contract total value

It differs throughout the business

All contracts go through the same process

Hint

Do you create a contract/deal team in all cases?

We create a team for high value/high risk/high complexity deals

No, the commercial responsible is the single person involved

Sometimes we seek some legal advice if and when needed

Hint

Do you plan ahead and determine the expected outcomes?

We discuss the negotiation strategy before entering in negotiations and quantify options tabled

We establish the walk away positions

We calculate the expected outcomes in an early stage

Hint

Is there one person in the organisation with enough insight into all the competing issues in the offering or will you benefit from a cross functional team perspective?

One Person only, to keep cost as low as possible

A multifunctional team for important deals

It depends on our business results whether we can afford a team

Hint

Does everyone understand the objective and terms of the deal? Is your organisation ready to deliver the value from day 1?

We start to onboard the organisation, when the contract has been executed. In most cases it takes several weeks or month before everyone is up to speed

From day 1 we are operational and every person in the process understands his/her role and the criticalities

From day 1 the front line staff are operational. The back office usually lag

Hint

Will your customer or supplier with a bespoke contract be set up to maximise value being offered from day 1?

This depends by customer or supplier

Yes in most cases they need to set up their own processes

Not important for us, that is their responsibility

Hint

Do you know the supplier or customer well enough to throw up options or respond to options that may not be standard but may be of value?

Yes we do know our customers that really matters to us very well

Some we know better than others

We are about standardising contracts so this is to be avoided

Hint

Do you value your contracts with a risk assessment

Never, we do not have the time for these kind of gadgets

Sometimes, when it really matters

Always, for that it is critical to get the risk/reward balance right

Hint

Do you know how the commodity prices impacts your finished products?

Yes

Do not understand the purpose of this question

Hint

Do you know when a contract is about to expire?

Not really

In some cases we are better than in others

Yes we are fully in control, using a simple system to manage this

Hint

Do you have all contracts stored, complete with amendments and is it the latest version?

They are stored but not easy retrievable

They were at some stage

They are stored and easily retrievable for assigned staff

Hint

Are you triggered to get a signed contract back from your customer and are the terms still the same?

Yes we have a process in place but does not work in all cases

Yes we manage this well

On a case to case basis

Hint

Are your key Sales and Supply contracts delivering the expected value?

No idea

Yes we follow this particularly well

We have no idea of the expected value but we measure the actual performance on a monthly basis

Hint

Do you monitor the contract performance to detect the expectation gaps on the contract portfolio?

Finance control of the quarterly appraisal process

The operational and financial performance of key contracts are monitored on a frequent basis

We monitor a contract performance when an issue occurs

Hint

Is the contract reviews part of someone's job description?

Not assigned, but the account manager is accountable for the contract activities

Yes, it's clearly assigned to staff members executive review for a specific contracts with scheduled timings

Finance does does all generic Review & Appraisal tasks. Assumption is that contracts outcomes will be detected in the P&L Reviews

Hint

Do you know the root causes of the expectation gap?

We have a some ideas of what the issues are

Our Managing Director has a strong opinion on what the root causes are

We measure continuously and apply a structured root cause analysis methodology

Hint

Are there mitigation plans and are they effective?

We have mitigation plans in place and leave it to individuals to activate if needed but luckily we have never had the opportunity to test them in real

We have mitigation plans in place and we apply them on a daily basis

We do not have time to spent on potential issues that will never occur; a waste of time and money.

Hint

Are scope changes accommodated in the contract?

No, we know what we want

No, why should we?

Scope changes are agreed upfront and will be followed as new contracts.

Hint

After completing this check list, my thoughts on contracting are:

Unchanged – we are doing well

Some good ideas came up as options we should look into

Our contracts are pretty simple – why complicate matters

Time is Up!