In this case, tactical sourcing teams must partner with marketing leadership to cultivate an approach that is sensitive to the overall business relationship without any party feeling as though it is being taken advantage of. Expertise in contract negotiation is also an important skill required by tactical buyers. In less mature procurement organizations, teams focus primarily on timely delivery and to a lesser degree on total cost, often ignoring the larger cost and risk picture.
In more mature organizations, tactical sourcing teams ensure that risk is mitigated by addressing contract creation where standard purchase order terms and conditions do not adequately protect the interests of the company. Within high-tech companies, industry experience can make a significant difference given the unique category requirements.
For instance, a software company may use a lot of outsourced IT talent, a requirement that calls for specialized contract management skills. Access to highly skilled talent in diverse locations can be gained through operating models that integrate global delivery under a unified operating entity by leveraging state of the art tools for effective collaboration and governance.
GBS, for example, by using shared and sometimes outsourced resources, can enable the required flexibility and scalability to utilize geography-specific expertise in multiple global markets without the significant investment of fixed setup costs in each market. Change management in procurement matters.
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It matters even more for tactical spend, where engaging procurement is often optional. To start, stakeholders must be motivated to make the switch, rather than being compelled to do so. Our experience suggests that stakeholder resistance is often due to a perceived loss of control and anticipated budget reductions. But procurement can counter these concerns with a fact-based approach that begins with data.
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For example:. Similarly, buyers should involve stakeholders to identify their preferred suppliers. Then, they can give a target price to these suppliers and ask them to match it. As procurement and finance executives strive for cost savings, risk mitigation and compliance, they should re-prioritize tactical sourcing and buying. While these benefits were previously constrained by limited resources, employing an advanced operating model for the related processes—often leveraging an outsourcing partner who brings the right processes, skills and analytics-based change management—can make a decisive difference.
Related Topics: Advanced Operating Models. Industries Contact Join Us. Meet Genpact Cora. Transform with digital Genpact leads enterprises into a rewarding future with digital innovation. Procurement and Supply Chain Bring the power of digital at the macro and micro level of every element of your process. Risk and Compliance Get ahead of risks and enable more robust compliance with our powerful solutions. Hear from industry experts and thought leaders for insights on how to realize potential.
See how our teams are creating bold breakthroughs for our clients, partners, and communities. Point of View Tactical buying as a transformational cost lever in high-tech: Surprising opportunities and savings. Take a copy for yourself. Download PDF. Three building blocks of a transformational tactical buy program There are several components that contribute to maximizing the opportunity for tactical spend savings. Our experience suggests that companies who reap the benefits of tactical buying share three characteristics: A strong focus on process rigor with operational excellence in sourcing Deep category skills, industry experience and access to market intelligence Data- and analytics-led change management programs that ensure stakeholder buy in Building these capabilities and realizing value from tactical procurement is possible by effectively implementing an operating model that is characterized by advanced business processes supported by technology systems and analytics, and delivered through a specialized organizational structure.
Ensuring process discipline with the appropriate levels of policy compliance Tactical sourcing is still sourcing. Investing in category expertise, industry knowledge and market intelligence Spend does not discriminate on the basis of volume. Driving stakeholder engagement based on empirical evidence generated by data Change management in procurement matters. In turn, business leaders can use these insights to encourage the organization to use implemented contracts that will generate material savings. Up-to-date cost reduction statistics can also convince stakeholders that a program holds far greater value than they may have anticipated.
To get to this point, the tactical sourcing team must run descriptive analytics that reveal trends related to savings delivered, unmanaged spend and consequent savings leakage, the noncompliance of stakeholders by the business unit and related metrics. Wherever you were in terms of contract management maturity, underlying contract management principles and philosophy were still much the same.
The evolutionary process, if we can call it that, was moving relatively slowly.
Most implementation problems today have their roots in this legacy — and this one piece of information provides crucial insight into how to resolve them:. Consider now that, for most high tech solutions to be effective, they must be able to capture all contract data, from across the entire business operation, including stakeholder involvement. This implies whole-business buy-in and high-level commitment to management systems that are designed around contracts. Indeed, we can go further and say that, without stakeholder support at the outset, full implementation may be impossible to achieve later.
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Contracts as we know them today are a product of the processes that created them. Do we actually need all of that information to manage our contracts — and could we re-think those processes, so they produce contracts in the standardized formats that computers can easily read? The largest, most complex, part of most contracts is really only of interest if something goes wrong - could we manage this information in a different way?
Many organizations have already left time-consuming processes of the past far behind, though in the past, progress has been gradual, with incremental steps to improve efficiency and effectiveness as and when the opportunity allowed often with significant opposition. But times have changed - and now the need is urgent. Unlike the pre-digital era, however, we now have a clear picture of where we need to get to for new technology to have its biggest impact.
The good news is that today, there is growing consensus around that urgency — which can be a powerful lever to gain the buy-in needed. To get an idea of the nature of the implementation program you may need to put in place, it pays to understand the five clear stages of a managed organizational transition from one-off contracting to optimized portfolio management:.
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Although progression through these stages may have been gradual in the past, technology available today can massively accelerate the time-consuming process of standardization of contracts — previously a significant barrier and drain on resources. Reaching this stage gives you the modular components you need to speed up implementation of more standardized and automated processes — and has the benefit of freeing key people much sooner to support an accelerated implementation program.
What are the features of the five stages, and what can we learn from them? Processes are ad hoc and very basic — when you need to draft a new agreement, you rummage through drawers and storage systems and mark up the latest, closest draft. Taking control, you begin to collect and organize. You use your most common agreements as templates, each with its own set of terms.
You set up informal contract teams with email workflow, possibly progressing to basic document assembly software, capturing basic contract data in a central repository, processes are still essentially manual. To streamline and simplify further, you begin to develop a library of the most commonly used clauses with standard contract profiles and templates.
This one development creates the building blocks that allow you to develop more automated processes, and move towards a systems approach with portfolios of contracts built from standard, modular and reusable components. With modularized components in place you can put in place workflow applications and automated systems -- including contract assembly, extraction of obligations and management of contract tasks -- allowing capture of all contract data and involvement of stakeholders in tactical planning.
All contract tasks are now managed through a fully integrated contract lifecycle platform. There is limited exception handling.
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Contracts are monitored via a dashboard tracking time, cost and quality metrics. Moving towards a concept of self-reporting contracts, the system provides alerts on compliance and risk, as well as predictive trend analysis. With the embedded ability to automatically connect to payment systems and other smart, external contract services via Blockchain technology, sophisticated systems are effectively supporting self-managing contracts.
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