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Contract: a term widely used but generally misunderstood

January 18, 2014

On the Public Spend Forum, Jonathan Messinger produced a wordcloud to identify ‘the seven most over-used words in Procurement’.

I was interested to see that ‘contract’ came top of the list. Now Jonathan, to his credit, dismissed that as an over-used term because, he said, it is ‘what we are all about’.

Spot on, Jonathan, but interesting that while the word may be so much used, it is in my experience so little understood. I would be fascinated to see how a majority in Procurement would define the word or, more important, explain the purpose of a contract. I bet most see it simply as a legally-driven document generated by the procurement ‘process’ (another term that features high on the list).

If indeed ‘contract’ is core to what Procurement does, why are so few trained in contracting? Why is the management of those contracts still so rarely a valued discipline? Why do so few Procurement professionals appreciate the impact of terms and conditions on supplier motivation, behavior and the value that is achieved?

One Comment
  1. haward permalink

    Morning Tim

    you ask “If indeed ‘contract’ is core to what Procurement does, why are so few trained in contracting? Why is the management of those contracts still so rarely a valued discipline? Why do so few Procurement professionals appreciate the impact of terms and conditions on supplier motivation, behavior and the value that is achieved?”

    My view here is that we have two different disciplines in play. Much of procurement is about process and many procurement people tend to be very strong on process. When we reach the end of the procurement process and get to the sharp end where delivery is required the emphasis on process is not useful and has to be supplemented , or even replaced , by an emphasis on management ; something in which too few procurement professionals excel. It’s that changeover with associated handovers and role changes that often causes difficulty in the execution phase. Post award management isn’t undervalued. It’s feared because it’s difficult and not all the answers are written down in a process document or a template.

    In addition many of us like the chase , the hunt more than we like the grind of management. The thrill of the actual or upcoming negotiation , the fun of the arm wrestling and the fascination of the wait for prices and commentaries makes the adrenalin flow. Managing demand , and planning delivery doesn’t cut it for those of us who want to be pumped up all day!

    Haward

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