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SRM: should it be taken seriously?


In a World Commerce & Contracting poll, more than 80% of business executives said that Supplier Relationship Management is an ‘important’ or ‘essential’ discipline. That’s perhaps not surprising, given the continuing headlines about supply chain disruption and shortages. Gaining better insight and control over supply, becoming a priority customer, even better understanding the next threat, are understandable priorities.

But when executives talk about ‘a discipline’, does that immediately translate to a specific role or business function? Is there a readiness – or perceived longer-term need – to invest in building capability? 

A readiness to invest 

The answer appears to be yes, since a little over 60% of those executives indicate that they either have or are about to expand capability. However, the route to improvement varies. Many associates improved discipline with better integrated technology and more robust data exchange. For them, digitization is key. Yet even those who see this as the way forward recognize the critical role that people will play – whether that’s analysts to make sense of the data, or relationship managers to build increased collaboration with the supply base, or process designers to ensure organizational and systems coherence.

How can we move SRM forward?

With the sense of urgency that these findings imply, why is SRM not more widely recognized and adopted? Several factors appear to be at play:

– for many, the role and purpose of SRM remains poorly defined.  Piecemeal SRM or “figuring it out along the way”, is not SRM and certainly does not provide ‘a discipline’.

– as a cross-organizational discipline, attempts to develop SRM capability often fall foul of internal politics; teams lack the skills to define ownership and manage the collaboration.

– very few people have received meaningful training to lead or perform SRM activities;

– in the absence of clarity or training, many see moving into an SRM role as risky. It may look interesting, but where will it lead?

At World Commerce and Contracting, we work with a growing number of groups to make sense of this confusion. We were well positioned to act, having developed a body of knowledge supported by skills assessment and certification standards almost 10 years ago – the first such program in the world, backed by solid research.

The path ahead

Today, we see the SRM discipline evolving to ensure delivery of value and control through the integration of contracts, relationships and governance. The combination of these three elements provides a coherent and consistent mechanism to work with key suppliers for mutual gain. However, while better systems are an important contributor, it is a consistent body of knowledge, drawing on proven methods and techniques, that is proving critical to success. This is true whether or not capability is developed through dedicated personnel, or as an adjunct to existing responsibilities.

Is there an ROI? The answer is clearly yes. Well-managed SRM has been shown to deliver significant cost benefits through improved market control and grasping opportunities for improvement. Today, as the poll of executives revealed, the benefits go further. They are increasingly focused on building strong, open and collaborative relationships, mitigating risks through improved problem-solving and identifying potential for innovation. 

In response to the market’s urgent need for low-cost, rapid and highly interactive learning, World Commerce & Contracting have supplemented their self-paced SRM training and certification with a new facilitated program see details at

https://www.worldcc.com/Learn/Professional-Certification/Supplier-Relationship-Management-Certification

Contracts, Commercial & ESG


Professionals in contract and commercial management care about the ESG principles, with 80% indicating they care ‘a lot’ or ‘a great deal’ about the environment. Concern about social issues is not far behind at 75% and governance comes in with 73%.

That is a snapshot from a short survey conducted by World Commerce & Contracting earlier this month. And while most believe that their organization is equally sincere in its efforts, more than a third are not convinced, with as many as 37% questioning the commitment to environmental issues, with social and governance at 33% and 32% respectively.

Those who responded represent approximately 300 different organizations. It is notable (though perhaps unsurprising) that buy-side engagement is considerably greater than sell-side, with many sell-side participants unsure about how they can contribute or waiting to be asked. Overall, some 53% say they are already engaged in some form of workplace initiative related to ESG and 43% indicating involvement outside work.

The level of personal engagement must lead to some questions over how representative these responses really are. Inevitably, the survey probably had greater appeal to those who care about ESG. However, a significant number indicated their readiness to engage in WorldCC’s ESG working group, contributing to the development of standards and training for CCM practitioners worldwide.

Do we need a Chief Negotiation Officer?


According to a recent article from McKinsey & Company, 93% of business leaders of companies with more than $1 billion in revenue reported “great interest” in introducing a new role to improve negotiating results: that of chief negotiation officer. 

In a webinar conducted today, members of World Commerce & Contracting do not appear to agree. “A trouble-maker”, observed one. “They’d need to be super-human”, commented another.

Where executives and today’s commercial negotiators agree is that negotiation is a critical competence and it is often frustratingly difficult, especially when it involves large organizations. Authorities are frequently unclear, stakeholders are narrow-minded or rigid in their thinking, gaining attention to develop plans or make decisions can be tortuous. In fact, negotiation is symptomatic of organizational complexity – and it is hard to see how a Chief Negotiation Officer would fix the multiple challenges that stand in the way of speed and value.

That’s not to say we should simply shrug our shoulders and accept the status-quo. It is clear that improvements can and should be made. Digitization of business processes and consequent integration of data flows will surely help, but that is not enough. Simplification of contracts (to make them easier to understand and discuss) is certainly one step. Moving away from rigid agreement templates to more dynamic clause libraries, with pre-determined fall-backs, will facilitate many simpler negotiations, freeing resources to focus on the more important transactions and relationships. Developing and implementing standard planning methods and techniques brings immediate benefits and supports capture of results, allowing future analysis of what works and what doesn’t.

It can certainly be argued that someone needs to have accountability for developing an organization’s negotiating competence, though this could equally (and perhaps more amicably) be achieved through an executive council of key stakeholders. There is also some attraction in creating a Center of Excellence, though again its role and remit must be carefully defined.

Negotiation is important – and probably too important to be thrust onto the shoulders of one person. What do you think?

If saving the world depends on contracts, is it time to give up?


At WorldCC’s recent Symposium, BioNtech CEO Ugur Sahin shared an uncomfortable truth. When the need is urgent, there’s no time for contracts. The alliance between BioNtech, Pfizer and Fosun Pharma was founded on ‘trust-based collaboration’ – a strong focus on shared governance and open, honest communication. When the world needs a vaccine, there’s no time for the traditional debates over contract terms.

Fast forward to today and a conversation with ESG guru, John Elkington. “The experts tell us that we have ten years to save the world”, said John, before musing over whether time would expire before the necessary contracts are in place.

Our environment, our social cohesion, our corporate governance all depend on shared commitments and resilient relationships. Contracts should be at the heart of building the networks and the ecosystems that we need to tackle the massive challenges that lie ahead. Yet, as John pointed out, the evolution and development of contract law and contracting practices move at a snail’s pace. So will an inability to design effective commercial mechanisms lead to the downfall of our world?

Commerce re-imagined

Ugur, John and a myriad of others are calling on the commercial community to respond. We must devise new ways to innovate and to accelerate the way that business relationships are formed and managed. As we discovered during the pandemic, it is essential to be flexible, adaptive and creative. Now, that spirit must not only live on, but it must move into overdrive.

That is what makes this year’s WorldCC Summit of such major importance and excitement. The nature and the quality of the speakers, the panels and the topics under debate are unparalleled. The diversity of those attending is precisely what our world needs right now – it is trust-based collaboration in action, as we rise to the shared challenge of making our world a better place.

If you are reading this, please join us, be part of this energized community as we discuss and develop the commercial frameworks, the contracting models and the collaborative relationships that are so critical to our future.

If only we weren’t so busy ….


The pandemic has caused a surge of interest in contract and commercial management, with executives paying increased attention to building capability. For many, this means supporting initiatives to introduce new tools and software and pushing for improvements to internal processes.

The WorldCC benchmarking study of commercial and contract management has already attracted replies from more than 300 organizations. Gain insight to all the trends and discover ‘best practice’ by participating here.

Priorities vary, with some focused on growth, some on speed and others more concerned about improved management of risk or finances. But no matter where the priorities lie, the expectations are clear – commercial resources are being pushed to increase their commercial relevance and the value they deliver.

A tough balance

Finding the right balance is not easy. Traditional contract management teams are strongly oriented towards risk mitigation and compliance, with less than one in twenty giving active thought to competitive advantage and only one in ten pursuing opportunities for value-add. Commercial groups are in general better equipped to demonstrate core value, with a much stronger focus on financial impact and change management.

Discover how your priorities and current performance compare to others in your industry and to the global leaders. Enter the confidential survey here.

There is widespread recognition of a need for action. However, a common refrain from those responsible for contract and commercial management is that operational workload is a key barrier – though some admit that they lack the right mix of skills for the fast-changing business environment. That shortfall often extends to other groups and functions on which they depend – for example, technical staff with sufficient understanding of contracting.

Investment is only part of the story ….

The readiness to make investment and to grow the role of contract and commercial management is good news. But what goals and targets should we be setting? Where will we find ourselves competing for rare skills and talent? How big are the gaps between leaders and laggards? To what extent will competence be created through dedicated CCM teams, versus a more distributed capability? These questions and many others will soon be answered for those who take time to provide input. All data remains confidential and is reported only in a consolidated form. Discover more at the 2021 Benchmarking Survey.

Digitizing the contracting process


From an unloved bystander to the star of the show, digitization of the contracting process is now a priority in more than 75% of organizations. Driven by the experiences of the pandemic, there is a new appreciation that contracts are much more than just words.

Digitization may be a priority – but for many, where to start and who will lead remains a source of confusion and contention

But where to begin and who will lead? The traditional challenges associated with contracting have not changed. It remains a multi-functional activity that depends on concerted action by a wide variety of stakeholders. A study being conducted by World Commerce & Contracting in partnership with KPMG reveals the consequences of this lack of clear ownership.

To participate in the survey and receive the report, visit https://iaccm.fra1.qualtrics.com/jfe/form/SV_dp4bhOnxEjVSNhA

Early results indicate that there is little consistency in where digitization initiatives are focusing or on who is sponsoring or leading them. In many cases, this is threatening the level of success – or indeed, whether there will be any sustainable improvement. From a practical point of view, digitization often needs to occur in bite-size chunks – but evidence suggests that it rarely succeeds if it is undertaken without first examining the entire process lifecycle and the data flows that occur within it.

It is the need for coherent and easily accessed data that is in most cases prompting the push to digitize. Many survey respondents believe that this need may mark a turning-point for the contracting process, resulting in the appointment of a more formal process owner with responsibility to ensure the quality and integrity of data flows and analytics.

Share your thoughts and experience at https://iaccm.fra1.qualtrics.com/jfe/form/SV_dp4bhOnxEjVSNhA

Will digitization fix the problem with contracts?


When tech meets humanity

In a webinar on March 9th, I’ll be joining legal and contracting experts Craig Conte and Mark Ross to discuss the future of contracts and contract management. Our research report (Tech Meets Humanity) suggests that fundamental change is arriving much faster than we expected – or will the forces of complexity once again stand in our way?

I rarely come across an executive who has a good word to say about contracts. Sure, they like winning them, but they hate the process and wish it could be made much simpler. Recent comments have included an unfavorable comparison with root canals and a suggestion that contracts should be declared obsolete.

So if there is such dislike at top levels, why hasn’t anyone done anything to fix it? The answer is that it’s just too complicated, there are too many stakeholders and – of course – it can’t be done unilaterally. Plus there are powerful forces to overcome, with the legal and finance profession often wedded to traditional methods and approaches.

Contract lifecycle management systems were supposed to fix the problem. By and large, they have not. They may have masked the issues to some extent and allowed some reduction in cycle times, but they have not addressed many of the core inefficiencies or sources of lost value. Is digitization the answer?

Join us on March 9th as we examine the problem, discuss the solution and explore the obstacles that must be overcome to secure a better future. For details and to register, click here.

Red lines lead to red faces: EU Commission Versus AstraZeneca demonstrates the need for change


Opinion: Tim Cummins & Sally Guyer

Contracts provide frameworks for business relationships and, as we know, when the relationship is going badly, out comes the contract. That is when we have executives and politicians engaging in the unedifying spectacle of citing terms and conditions that they don’t fully understand and the people who wrote them are unable to explain …

It is helpful when contracts provide a practical operational guide, especially to assist when things are not going as expected. If they are designed and drafted with this purpose in mind, it enables business people – the non-lawyers who are the ones requesting the contract – to assess and validate its contents. They are the ones who should be affirming that an agreement reflects their intent and effectively addresses some of the ‘what ifs’ that could derail performance.

But of course, contracts are rarely like that. They are based on legal traditions that render them almost incomprehensible to those outside the profession (past research suggests 88% of business people find contracts ‘difficult or impossible’ to understand).

So, in spite of all the redlining that doubtless went on when finalising the agreement between the European Commission and AstraZeneca, the result appears to have been an ambiguous contract that is not ultimately going to help anyone resolve the immediate situation – a shortage of supply. All we do have is a lot of red faces. Whether the contract ultimately offers the Commission any effective recourse only time will tell – but in the meantime, we are seeing the rather unproductive spectacle of politicians selectively citing contract terms as part of a public relations exercise in blame avoidance.

We all know that contracts and contracting processes need to change, that they should become business assets and vehicles for communication rather than weapons. Once again, this life-and-death incident proves the point.

Barriers to collaboration


It is understandable that collaboration is such a big topic these days. The pandemic caused many people and organizations to appreciate the extent of our interdependency, the fact that the best solutions come from working together. Of course, not everyone succumbed to this spirit of collective effort, but in general those who collaborated seem to have emerged stronger and with a more positive outlook than those who did not.

But now, as we move forward, will collaboration survive, especially in a business context? We have heard for years that people typically prefer to collaborate, that they like ‘win-win’ scenarios and behaviors. But turning that preference into a reality has proven challenging ……

The three big barriers

Number one: do people even have a common understanding of what collaboration means? In a recent (small) survey of suppliers, the overwhelming view was that many buyers say ‘collaboration’ when they actually mean ‘subservience and conformity’. So when we use the word, do we actually mean that we want to develop a solution together, based on shared input and mutual respect, or do we actually mean ‘Do what I say and don’t complain’?

Number two: measurement and motivation systems mostly get in the way. Although we prefer a collaborative environment, there are just too many factors that derail our good intentions. The need for speed, the pressure for short-term savings or rapid revenue, the difficulty of coordinating and reconciling multiple opinions. If our personal goals and incentives were based on the way we behave, the way others see us, the quality of longer-term results, then collaboration might rapidly flourish – but until then, it remains a ‘nice to have’.

Number three: external collaboration is thwarted by the absence of internal collaboration. Our same mini-survey highlighted how rarely organizations speak with one voice. Different groups and functions typically reflect different interests. As one respondent observed, even if different stakeholders were united at the beginning of a contract or relationship, their views often diverge over time. This leaves the counter-party ‘stuck in the middle’, trying to deliver something that satisfies all sides and in consequence ‘not seen as collaborating appropriately’.

So if you are serious about collaboration, you really do need to reflect at both a personal and organizational level and ask whether you have the attitudes and capabilities to make it a reality.

Contracts – another victim of COVID-19


While it would be premature to announce the demise of contracts, there is no question that the pandemic revealed their unhealthy state. In practical terms, they served almost no purpose in dealing with the issues created by COVID-19.

Join World Commerce & Contracting CEO Sally Guyer in conversation with Ned Coleman, Executive Director of Contracts at Accenture, as they discuss the impact of the pandemic on contracts and contracting practicesregister here.

Most business contracts attempt to create certainty. They are designed to impose fixed obligations and establish consequences for failure. Negotiations repetitively fixate on risk allocation – liabilities, indemnities, performance undertakings. Endless hours – and large amounts of money – are spent in agreeing terms which proved irrelevant in dealing with the pandemic.

As market uncertainties continue and increased volatility and variability are established as ‘normal’, what is the future of contracts? Do we find ways to make them more agile and adaptive? Does it mean shorter periods of commitment, or perhaps greater focus on governance terms and principles? It is clear that contracts will not disappear – there are many reasons why we need them. But they must change; we must step back and ask ourselves once more ‘what is the purpose of contracts?’ We must recognize that the depth of purpose varies so there is no ‘one size fits all’ response – for example, a short term commodity purchase is not the same as a long-term service delivery.

Organizations are already pondering and designing for the future – reconsidering contract terms and commercial models; re-thinking risk analysis and scoring; moving away from rigid templates towards AI-powered clause libraries.

In recent times, the standardization of contracting practices has operated as a constraint on business and negotiations have become a battle over the relative power of the parties to impose their preferred terms. That must change. We need contracts, but they must be practical, intelligent and sources of mutual value. 2021 will be a year when contracting recovers its health.

Join World Commerce & Contracting CEO Sally Guyer in conversation with Ned Coleman, Executive Director of Contracts at Accenture, as they discuss the impact of the pandemic on contracts and contracting practicesregister here.