Undefined workflows damage performance
At this week’s IACCM Europe conference, approximately two-thirds of the participants acknowledged that their company does not have a consistent workflow or process for contracting. In many cases there is no formal definition; in others there are wide variations between countries or operating units.
Since many of the companies represented are large, sophisticated organizations, this finding is surprising. It reflects continued lack of appreciation by top management of the impact on performance of good (or poor) contracting processes. Of course, this lack of process inevitably also means a lack of data, so there is no perceived reason to change or improve.
One major consequence of undefined workflow is a high level of internal contention. Delegates noted the extent to which lack of clear process acts to undermine a sense of responsibility and creates a tendency to allocate blame. This is evident at many levels – for example why contracting takes so long, why negotiations are hard to resolve, why implementation of contracts is poor, why obligations are not met. Everything is someone else’s fault and no one takes ownership to drive improvements.
When asked whether there is an ideal point of ownership for contracting, conference participants had mixed views. Current reporting lines are quite varied – Legal, Finance, Operations, Procurement. A significant number report to the head of a business unit and some consolidated groups have a direct line to the CEO. Clearly, more senior reporting lines reflect a bigger role in forming and implementing commercial policy and strategy; others are constrained to perform a tactical operational role supporting specific contracts.
Absence of workflow carries a big cost in terms of competiveness and financial performance. The conference debated these issues in great depth, illustrating through many examples the benefits that can be achieved through consolidation and process definition. Many left the event feeling inspired to highlight the opportunities that can be realized; IACCM will be supporting and monitoring progress.