Using Strategic Sourcing to Improve Contract Negotiations Part 3: The Follow Up

3-10-2016 | by Benjamin Fleshman

You’re coming close to the end of your strategic planning best practices, but there are a few more steps to take. The fortunate news is that the final step of your strategic sourcing process is so similar to the first step that they often run together. After the contract negotiations are complete, you will need to do more analysis. Even better news, this analysis should be slightly easier and is more about fine tuning your process than it is about beginning the process anew.

 

Centralize Your Contract Storage

If you ever hope to be able to consistently analyze your contracts, especially dated contracts that can be easily lost, then you will want to find a way to organize and store them in a location where your team can easily access and analyze them.

Perhaps the best place to store contracts is in a cloud-based contract management system, such as Concord. It’s an easy to use system that allows you not only to store your contracts, but to track their usage, deadlines, and to reuse contracts later. You can draft new contracts, store them, negotiate their terms, and edit them all online. When you’ve finished with that, you can sign them electronically, which will save you a lot of time, and save your partners time as well.

This also means that you have a good way to follow up on the contracts while the terms are being carried out. Using a cloud-based repository will allow you to get email alerts when deadlines approach, summarize key terms for you, and help you review the contract whenever and wherever you please.

For future contracts, rather than drafting an entirely new contract, you can always recycle an old one, altering only what you need to, and sign it electronically to save time. This is just one way to maximize your sourcing strategy.

 

Analyze the Terms of the Contract

 When you are coming up on another opportunity to buy, analyze the contract that you signed for the benefits and drawbacks. Consider the total cost of ownership that was implied in the contract, and decide whether or not that cost was worth the product. If it is, then maybe you scored a good deal. If not, then what would you do differently? What would you ask for next time? Is the supplier that you purchased from willing to meet those terms, or do you need to negotiate a deal with a new supplier?

Consider, too, how your deal affected your supplier. Did they lose money on the deal? Are they likely to do business with you again? If your contract cost the supplier more than they were willing to give, then maybe you need to lighten up your approach to maintain good relationships. Only your team will really know what needs to happen going forward, but be sure that you ask yourselves these critical questions to determine if the contract should be renewed, or awarded to a different party.

 

Maintain Supplier Relationships

After you’ve made the purchase and fulfilled the contract, you need to be sure that you treat your business partner with respect and dignity. You’ve done everything that you could during the negotiation process to foster a healthy relationship, but now you need to maintain that relationship. Be sure to make delivery dates, and do good business.

If you liked their services, recommend them to others. This helps them be more generous with you, because they trust you and know that you’re good for business because you bring them customers. This is, of course, only one example, though there are numerous others. Whatever you do, be sure that you maintain the good will that you have built with this company because it could lead to more lucrative business deals for both companies in the future. That’s really the point of strategic sourcing, isn’t it? Making sure that your company gets the best deals for the best price.

CLICK HERE for part 1

CLICK HERE for part 2