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Buy-side and Sell-side Contracting: should it be integrated?

April 29, 2022

Are there benefits in consolidating buy-side and sell-side contracting and commercial resources? If yes, should this be a full or partial integration and are there potential exposures or conflicts of interest to watch out for?

These are questions that many organizations – especially those in business-to-business markets – periodically ask. It seems logical that a consolidation of resources might offer greater efficiencies and savings, perhaps also adding to organizational effectiveness through a broader skill set and improved data flows. Based on extensive insight from its benchmark studies – and regular conversations with members – World Commerce and Contracting has produced a short report and here is an extract from it.

Current State

Across industry as a whole, full integration of buy-side and sell-side contracting and commercial management is relatively common in smaller organizations, where it offers resource and skill efficiencies. In these organizations, individual practitioners are often responsible for both purchasing and sales contracting. This is less likely to be the case in larger corporations, where functional separation and individual specialism are the norm. However, this is not universal and there are significant variations between industries. The table below, based on data from six indicative industries, illustrates the point.

What is the state of integration of resources responsible for buy side and sell side contracting?

Aerospace / DefenseBanking / Insurance / FinancialEngineering / Construction / Real EstateManufacturing / ProcessingServices / Outsourcing / ConsultingTelecoms
No integration (separate reporting lines)53.20%66.70%31.80%74.10%47.80%84.60%
Plans for integration2.10%5.60%4.50%3.70%8.70%3.80%
Areas of partial integration34.00%19.40%40.90%18.50%26.10%11.50%
Fully integrated10.60%8.30%22.70%3.70%17.40%0.00%

It is notable that the industries with higher levels of integration are generally project / program oriented where greater coordination between buy-side and sell-side activities is essential. However, as the data shows, integration is typically not absolute. ‘Partial integration’ often means that team members supporting the sales contract also take responsibility for sub-contracts, rather than more general procurement activities.

The Report

The report goes on to discuss the benefits of integration, the extent to which these are typically achieved, the barriers that often prevent success and emerging trends that are making this an important topic for the future.

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