A year in review: contracts and commercial management

In 2018, the International Association for Contract & Commercial Management grew by more than 25%. Growth came from multiple sources – so what are the factors that have resulted in a total membership now exceeding 53,000?

Trade is at the heart of what we do

In simple terms, there are four forces driving the evolution of trading relationships and forcing increased focus on contracting and commercial capabilities.

The most significant is the continued disruption caused by the evolution to a global networked economy.  Not only has this destroyed many traditional trading patterns, but it is creating dynamic and unpredictable market and geopolitical conditions, including the rapid formation and dissolution of complex supply networks. 

At the same time, society and business are increasingly focused on the quality of outputs and outcomes, as we move from a world of traditional products to one of customer experience, services and solutions.

There is also continued growth of regulation and associated levels of transparency and accountability. In all cases, organizations have recognized they need to make better decisions in selecting their trading partners and they need to improve the oversight and segmentation of those relationships. Commercial judgment and contracting competence are fundamental to financial returns, business controls and management visibility.

Finally, the digital revolution is having an impact on all businesses. For example, the growth of connected devices through the Internet of Things (IOT) is forcing businesses to rethink how they are structured and organized, and the growth of social media is challenging the way businesses deliver to customers and how they interface with, and work with, their supply chains. 

Consequences

Commercial and contract disciplines are shifting towards a greater balance between their legal and compliance focus and their contribution to economic value and financial returns. This need – and the solution – is embodied in the increased volume of Capability Maturity Benchmarks that IACCM has undertaken for its corporate members, supporting process and system updates and improvements.

This fast-changing environment is stretching the skills of existing practitioners, many of whom lack the access or the influencing skills to make effective representations to management about the needs or impact of change. In some organizations, a new breed of commercial executives is emerging, often drawn from other business disciplines. Many are flourishing because of the training they receive from IACCM learning programs and continuing professional development.

As for 2019, it promises to be an even more exciting year … about which I will write more soon.