How do you deal with supplier contract complexity and diversity?

Identificar os tipos de contratos necessários com seus fornecedores é de fato o primeiro passo crucial. Existem várias op??es, como pre?o fixo, custo-mais, tempo e materiais, baseado em desempenho, incentivo, entre outros. Cada tipo tem suas próprias vantagens e desvantagens, dependendo da natureza do trabalho, do nível de incerteza e dos resultados esperados. Escolher o contrato adequado que melhor se adapte às suas necessidades e objetivos, alinhado às capacidades e expectativas do fornecedor, é fundamental para estabelecer rela??es de sucesso.

The best contract type depends on the specific circumstances of your project and the supplier you’re working with. It’s always a good idea to seek legal advice when drafting and negotiating contracts. Choose a contract type that balances risk appropriately between you and the supplier and ensure it complies with all relevant laws and regulations in your industry and region.

In order to effectively manage supplier contracts with their complexity and diversity, it is important to have open lines of communication, use standard contract templates whenever possible, and use contract management software to automate procedures and guarantee compliance. Legal advice should also be sought out in order to negotiate complex terms and conditions and minimize risk.

True, these are the most known types of Buyer-Beneficiary contracts for delivery of a products or services, this should be aligned with the business stakeholders requirements and the related vendor/supplier/service provider., Moreover we should add to this equation the Geopolitical factors and the other risks like (inflation, currency devaluation, the beneficiary country risk analysis), we also should consider the corporate compliance guidelines for conducting business in this region/country, especially if the company business model is mixed between global and local engagements and integrations.

Contracts should include provisions for unexpected events or changes in circumstances (e.g. force majeure clauses). Failing to include these can lead to disputes and complications if such events occur. Always plan for contingencies and ensure they are adequately covered in the contract.

Based on the Procurement/Sourcing model, you can choose to go with the ready-made corporate contracts template, or you will design/tailor your own contract articles based on the product/service type, one time we discovered that in some countries we need to dig into deep details level for points like (invoice submitting date), because it could make a difference in the total project cost, or to get clear sign-off for the (responsibility and escalations matrix).

Monitor new regulatory requirements and update your policies and procedures to reflect these changes. Suppliers may need to alter some elements of their operations to comply with your new requirements so ensure that these changes are communicated well in advance. If you are managing a lot of supplier contracts simultaneously then consider using a supplier contract management tool to facilitate the communication of policy and contract updates and track supplier responses.

Risk management plan is essential for any Procurement/Sourcing project, and this should be identified at the early stage of the project, and it should be communicated with the project stakeholders at the approval stage/stages as well. Part of this risk management should be the periodical governance meetings with the supplier/vendor and the direct stakeholders, to tackle these risks proactively (in case of any).

The business volume with the suppliers will be important factor for negotiating the cost savings weather it's cost reduction or cost avoidance, having supplier procurement plan could be very good tool to leverage your corporate strategy objectives, like collaboration in multiple markets/regions, or extending the services of this supplier to additional markets, these kind of incentives could be additional advantage for more Win-Win business.

Be transparent about challenges to build trust with your stakeholders. Acknowledge and address feedback and show appreciation for each stakeholder’s contributions. E.g., a supplier’s feedback about a change in raw material availability can prompt timely contract modifications, preventing project delays and cost overruns.

Main part of the Procurement/Sourcing Manager is Supplier Relationship Managment, it should Bi-direction communication channel, sending and receiving information related to the current delivery agreement/agreements, in addition to the market intelligence that could be useful for the business in the short and long term, with well-established communications plan, and that should include identifying SPOCs from the related key stakeholders, to save everyone time and efforts and for more efficiency.

Supplier categorizations, is very important concept needs to be considered in managing the relationship with the suppliers, especially in the onboarding phase/process, is how we should categorize this supplier/partner? we can't have one strategy for all suppliers, we should identify the well-established suppliers in terms of (financial capabilities, compliance, market presence, market share, long term, etc,...), and the other low spend suppliers as per the procurement plan. Suppliers management strategy should also consider the business plan with the long-tail suppliers and the high spend suppliers, based on the corporate strategy and other market/business factors.