Core Competencies for a Buy-Side Contract Manager

In many organizations, the role of buy-side contract managers is increasingly recognized as critical for optimizing value and managing risks. Drawing from the WorldCC 2023 benchmark studies, the following core competencies emerge as essential, with some variation in their relative importance depending on the scope of role (for example, level of engagement in pre-award activities, extent of responsibility for Supplier Relationship Management). In writing about these, I have also made some allowance for more recent work on the impact that technology (and specifically Artificial Intelligence) is starting to have.

Holistic Understanding of Contracting Processes: A buy-side contract manager must have a comprehensive understanding of both pre-award and post-award processes. This includes the ability to establish contracting policies that align with market and business strategies.

Risk Management and Complexity Handling: Given the increasing complexity of contracts and the severe risks associated with failures, a contract manager must be adept at managing these complexities and mitigating potential risks.

Technology Proficiency: With the evolution of technology in contract management, buy-side managers need to be proficient in using contract management systems. This includes the ability to find and search contracts efficiently, as well as understanding the need for dynamic and varied contract terms. Building familiarity and use of AI-enabled systems will transform how we work – perhaps not tomorrow, but steadily over the next two years.

Operational Performance Improvement: Improving operational performance is a key driver for buy-side organizations. Contract managers should focus not on fixing problems, but reducing or eliminating them – the ‘friction points’ that increase cycle times, value erosion, and operating costs – while also enhancing approaches to regulatory and legal compliance.

Organizational and Reporting Skills: Buy-side contract managers should be capable of navigating diverse organizational structures and reporting lines. This includes understanding the implications of centralized, center-led, matrix, and decentralized models, and adapting to the frequent changes in reporting lines, as well as what they need to report to demonstrate their value to the business.

Communication and Collaboration: Effective communication and collaboration skills are essential, especially given the fragmented nature of resources and responsibilities in buy-side organizations. Contract managers must work closely with multiple departments to ensure cohesive contract management practices.

Strategic Relevance and Value Demonstration: Contract managers should focus on increasing the strategic relevance of their role by demonstrating the value they bring to the organization. This involves aligning contract management activities with broader business objectives.

Analytical Skills: The growing focus on contract data management and its enablement through digital technologies means that contract management is fast becoming a far more fact and data-driven discipline. This means that the modern contract manager must be skilled at extracting, analyzing and interpreting data to provide proactive insights to performance and risks,

Negotiation and Stakeholder Management: No matter what the scope of the contract manager’s role is, today’s fast-changing market environment makes negotiation a continuum across the contract lifecycle. Therefore it is essential to demonstrate competency in both internal and external negotiations, with associated requirements for problem-solving and influencing.

Financial and Legal Awareness: Contract managers must be competent in understanding core legal and financial principles associated with managing contracts. This includes a demonstrated readiness to engage experts when needed. While their competency may be extensive in the context of the contracts that in their core portfolio, they should also have an ability to quickly grasp key issues in new or unfamiliar forms of agreement.

Adaptability: Historically, an ability and readiness to change was considered essential, Today, that has grown to become a far more pro-active need to demonstrate adaptability and a readiness to initiate or lead change. Volatile markets and business needs make change an inevitability in any long-term agreement; it is therefore something that the contract manager must recognize and facilitate in their day-to-day activities.

Conclusion
These competencies must be supported by appropriate measurements and personal targets. Increasingly, contract managers are measured on business impact – for example, the quality of outcomes achieved, levels of customer satisfaction (internal) and overall supplier feedback on ‘ease of doing business’. Cycle times are also a key focus, not only in respect of contract award, but also in handling on-going change. Depending on the nature of the contracts being managed, there may also be measures around dispute avoidance and contributions to margin protection and improvement.

Finally, to those who see contract management as a repetitive, compliance-focused activity that will soon be undertaken through AI, I say you are wrong. It is true that AI will take over many of today’s tasks, and in doing so it enables a far more dynamic discipline, informed and proactive, generating measurable business value that focuses on outcomes.