Strategic Supplier Relationship and Contract Management

We review the business outcomes you are looking to achieve and your internal stakeholder expectations as to how you perceive that your complex supplier relationships will help your organisation accelerate achieving those outcomes.

Having reviewed your business expectations and outcomes, we’ll then look at a few examples of your current complex/strategic supplier relationships.

Between us, we can discuss how you feel about whether you are achieving what we have evidenced as being the ten key ‘behavioural principles’ that we see in the most successful complex / strategy supplier relationships.

We’ll also look at where the evidence supports your perceptions and where it does not. These principles are:

1. Objectives being met. Your supplier is helping you to achieve your project objectives consistently, which in turn, means this is enabling you to achieve your business outcomes.
2. Critical friend supplier. Your strategic supplier is both supporting and challenging you to work with them strategically to achieve on-going maximum value.
3. Inherent commercial trust and good ethics. Both you and your supplier operate to high professional ethical and personal moral standards. In turn, the supplier delivering services to a high consistent standard, builds commercial trust between everyone.
4. Sustained collaboration and innovation. You govern the relationship in a highly collaborative manner, that results in great innovation between you to optimise critical service delivery and streamline complex project solutions.
5. Reduced service cost. Sustained collaboration and innovation in service delivery is driving significantly reduced costs for BAU services.
6. High reputation with your peers. The ability to drive on-going service innovation and reduced BAU costs greatly increases your reputation with your executive peers.
7. Internal team aligned. Truly collaborative operating governance means your internal senior stakeholders are all aligned as to the outcomes they are achieving from the relationship.
8. Services always aligned to outcomes. Having a 6 monthly re-shaping process to check that business objectives and outcomes are still current and where they are not, to re-state/re-generate them, and then adjusting services/solutions to meet these updated objectives and outcomes, means your expectations are being sense checked and service re-aligned to meet these changing expectations. 
9. Flexible/agile contract structure. As part of reshaping/realigning services, the contract terms and schedules allow for reshaping of the supplier’s delivery of services and solutions, based on a value for money assessment at each reshaping cycle. 
10. Evidenced based results. Firstly, that the KPIs you have in place reflect the real value your organisation is achieving from the strategic supplier relationship you have in place. Secondly, that your process of validating performance, service/solution cost and ROI data means that it will stand up to independent scrutiny so that senior executives on both client and supplier side can rely on that data for improving performance on an on-going basis.

We’ll review your existing strategic supplier relationship and contract management process against the BPG ‘Optimise’ model (an evidenced ‘what good looks like’ model from over 500 complex supplier relationships) having first aligned the model to your business outcomes.

We can determine which aspects of your existing relationship and contract management process are already doing well and are aligned to your business outcomes.

We’ll also assess where it would help to improve alignment to generate even better value. The eight principle foundations of the Optimise model that will help you drive the ten relationship characteristics (behavioural principles) above, include the following : 

1. An Articulated Business Vision. The organisation has clearly articulated specific business objectives it will achieve once the service/solution has been implemented.
2. An Intelligent Client Function (ICF). An ICF team that demonstrates strategic, commercial and partnership behaviours an Intelligent Supplier expects.
3. An Intelligent Supplier. A supplier that understands the ‘holistic’ objectives of an Intelligent Client and strategically supports them.
4. Clear Service Delivery Requirements. Clear articulation of the ‘use cases’ and business objectives the client is seeking from the supplier and its solution to enable for it.
5. Supplier Expert Responsibilities. Clarity of an Expert Supplier’s “Duty to Warn” and how that impacts the pre-contractual due diligence responsibilities between the client and the supplier.
6. Fit-For-Purpose Contract. Contract terms that are reverse engineered from the business objectives, to support ‘enabling’ behaviours.
7. Buying Governance. Procurement governance that drives the right foundations to assure a fit- for-purpose solution/supplier is procured.
8. Relationship and Contract Management. Strategic Relationship and Contract Management that assures on-going benefits are realised for the life cycle of the relationship.

Aligned to your specific business outcomes, we’ll benchmark what the most appropriate strategic supplier management skills that are required from your internal team, to ensure you encourage your suppliers to support your business objectives in the most optimum fashion, quickly. The key internal team skills that we assess and align to your business outcomes, are :

1. Thought Leadership & Strategy. (a) How effective the internal team is in establishing and forecasting the strategic supplier services/solutions available to support your own organisation’s effectiveness in serving its clients and (b) its ability to  plan, implement and mobilise that strategy.
2. Innovation/Service Re-Shaping. The governance processes in place that captures changing organisational objectives and outcomes, good existing operating practice, where existing operating practice needs to be realigned to drive better value and the process of updating written contracts and schedules so they continue to align to (a) the changing business objectives and outcomes and (b) the supplier services/solutions being delivered.
3. Commercial Trust and Ethics. The clients perception of the degree of Trust and Ethics that are being achieved by the supplier, from the supplier’s services/solutions that are being delivered to the agreed outcomes, on time and to budget. Separately, the supplier’s perception of the degree to which the client’s dealings with the supplier are being conducted in a commercial trust and ethical manner.
4. Fit-for-Purpose Contracting Skills. The degree to which the client team (and its external advisors) have contractual structures in place that drive ‘enabling’ and ‘innovative’ behaviours between client and supplier to allow on-going maximum value to be derived over the lifetime of the relationship. 
5. Expert Supplier Responsibilities. The degree to which the client team understands the supplier’s “Expert Responsibilities”, implied by recent case law, have been incorporated into the requirements definition, procurement, contracting, project management, operating and performance optimisation process. 
6. Commercial Negotiation Skills. The depth of domain expertise within the client team in leveraging and optimising ‘Interest Based’ negotiation skills to drive maximum value between client and supplier on a win-win basis.
7. Buying Governance. The degree to which the internal team has developed a procurement process that starts with the ‘end in mind’, ie. how the procurement process will operate a due diligence process that can safely assure a suitable fit for purpose service/solution is likely to be implemented on time and within budget.
8. Objectives/Process Alignment. How much knowledge the internal client team has of (a) the key objectives the organisation is aiming to achieve and by when, (b) the governance process of identifying changing market forces and which client objectives need to be realigned, as a result, (c) what operational processes and supplier services/solutions need to adapt to meet the changing objectives and (d) the governance and contractual documentation that will need to be amended in the event of objectives and supplier service / solution changes. 

We’ll review the performance data, cost information and return on investment you hold for your strategic suppliers and determine, against our internal reference framework based on over 500 complex / strategic supplier relationships.

From this, we’ll determine between us which data stands up to robust independent scrutiny and which data is more subjective. Within the context of the available data, we assess its relevance, accuracy, timeliness and punctuality, accessibility and clarity, comparability, coherence and completeness. 

The roadmap takes into account:

1. Your business plan of outcomes you want to achieve and by when
2. The degree to which any complex project services/solutions are necessary to achieve your business outcomes
3. Where your existing supplier relationship and contract management process is already aligned to supporting your business outcomes and where some realignment of it will generate further value for you
4. How your existing processes of procuring new strategic relationships, remediating and improving existing relationships and the exit and transition of relationships into new service/solution provision aligns with your business outcomes.
5. We’ll also look at whether any realignment of your existing processes will assure better fitness for purpose of those strategic relationships. Within this area, it’s normal to consider how appropriate court-case-precedents that involve strategic relationships and the supplier’s “Expert Responsibilities”, will impact your creation and updating of policies involving:
   1. Roles and responsibilities between you and strategic supplier, including individual internal job descriptions and OKRs
   2. Operating governance
   3. Relationship and contract management governance (to assure the supplier’s “Expert Responsibilities” are not inadvertently diluted and undermine your contractual protections)
   4. Your competency framework for the Intelligent Client Function Team, including the interdependent elements of cross-functional roles and responsibilities
   5. Team capability building including training, coaching and mentoring aligned to agreed business outcomes
   6. Overall process modelling aligned to the ‘Future State’ (target operating model)
6. Output schematics. The outputs will include and explain the preferred key options, key milestones, what is already working well for you, and where improvements can be made that will help to optimise maximum value in your strategic supplier relationships.