Procurement and supply chain leaders are rethinking what drives real value. Research by the Center for Advanced Procurement Studies (CAPS) confirms that supplier collaboration, refreshed category strategies, and cross-functional alignment now top the list of strategic priorities. These are seen as the route to better cost outcomes, stronger performance, and more adaptable operations. But to many, this is not new news: the challenge remains, how do we alter the mindset of today’s practitioners?
The truth is that value isn’t won or lost at the point of contract award. It’s won or lost during performance. That’s where supply relationships either deliver, or become a source of problems. It’s where the level of internal alignment creates harmony, or generates friction and contention. This is why the aspiration reflected by CAPS requires a major shift in role and image, overcoming a legacy framed by cost control, rigid terms, and limited trust in both colleagues and suppliers.
This is where WorldCC makes a real difference. It’s the only organization that combines buyer and supplier perspectives to generate the shared understanding that underpins collaboration. By providing a true lifecycle view, its research and training help teams step into a broader role, from need identification through to performance and value realisation. We don’t just offer technical annd procedural insights – we provide a way to rethink stakeholder needs, to understand where risk really lies, and to build the commercial and contracting practices that support shared outcomes.
The future depends on collaboration because the problems we’re solving can’t be solved in silos. Our contracts and relationships must provide frameworks for transparency and teamwork, supporting adaptability rather than conflict. To achieve this, Procurement must become a connector, trusted by the business, trusted by suppliers, and equipped to lead change.
That’s the role WorldCC exists to support. And it’s why more organizations are turning to us as they look to strengthen their commercial capability and impact.
Most supply relationships are not enduring partnerships built on shared values and mutual goals. They are conditional, to varying degrees transactional, and shaped by shifting power dynamics. This is not necessarily a flaw: it’s a rational response to uncertainty, competition, and the need for optionality in the market structure we’ve created.
Rather than fostering long-term alignment, businesses often seek to balance two competing imperatives:
- A desire for commitment, where it supports cost efficiency, security of supply, or innovation investment: against a need for freedom of action, to move to alternative suppliers, redesign products or services, shift to new markets, or discontinue unprofitable operations.
This makes even the most committed supply relationships to a large extent a marriage of convenience: cooperation when incentives align, defensiveness when they don’t. Trust is inherently limited, which is why transparency is offered selectively and with limits. And commitments are hedged wherever possible.
Contracting Is the Negotiation of Boundaries – Not a Platform for Collaboration
It’s not accurate to say that contracting is designed simply to protect freedom or limit collaboration, but contracts are the result of negotiated battles over where and how much freedom each party is willing to cede in exchange for certainty, control, or reward.
Commercial contracts routinely wrestle with questions such as:
- Should the buyer commit to volumes, or reserve the right to adjust orders?
- Can the supplier change products or substitute components without approval?
- Who controls termination and under what conditions?
- How are exclusivity, competition, and IP treated?
- What are the remedies if supply is disrupted or if the buyer walks away?
Thus contracts often end up as defensive (preventist) documents, focused more on limiting the other party’s freedom than enabling joint outcomes. Even where collaboration is discussed, it is usually framed as a risk mitigation tactic, not a core operating principle.
This is why many contracts struggle to support the kind of agile, coordinated behavior the McKinsey nerve center model envisions. They are not built and negotiated for shared responsiveness, but ultimately with a strong focus on unilateral protection.
To achieve value we must be transparent, but transparency exposes us to risk. So we can get comfortable with this in a short term engagement where fundamental change is unlikely, but not when we have to divulge longer term intent (eg potential I may change my mind, select a new partner, discontinue a product line, exit a market, drop my prices etc). Even my own negotiators probably won’t know about plans like this: they are closely guarded secrets – which condemns us to a continual compromise on the value we can achieve.
Never slow off the mark, my colleague Cinthia Nazario Martin offers us insight.
What are your ideas, thoughts, and vision regarding the management of trade and contracts in Mexico as a result of the new tariffs from the United States?
Interviewee: Matias Nazario Morales
Position: Coordinator of Advisors to the National Leader of the National Union of Education Workers (Sindicato Nacional de Trabajadores de la Educación)
First of all, if the 25% tariffs on companies exporting to the U.S. impact Mexico, they will also have some effect on the U.S. Additionally, Mexico will face challenges due to currency depreciation and a decline in remittances sent by Mexicans living in the U.S., as these will also be subject to higher taxes.
The tariffs will also affect trust in cooperation efforts to combat organized crime. President Trump frequently highlights fentanyl trafficking, which originates in China, with Mexico and Canada serving as key entry points for this substance.
Contracts will need to be reviewed, and I believe this uncertainty will create a niche for new opportunities. However, I see the tariff issue as temporary—opening multiple trade disputes simultaneously is complex. The U.S. is simultaneously challenging China, Canada, and Mexico, while also distancing itself from Europe, which will have consequences. That said, I maintain that even in this crisis, there is room for opportunity.
Additionally, Mexico’s legal framework will undergo changes starting June 1, with a new judicial system and updates to the regulatory framework.
Questions:
1. How is this a niche opportunity?
During crises, many contracts are canceled, but with the update of Mexico’s legal framework, new opportunities will emerge. There will be more trade, more work, and new contracts, which can create further opportunities.
2. What do you mean by a new regulatory framework?
The legal reforms will introduce new ways of applying and interpreting the law. This is partly due to the renewal of 50% of judges, magistrates, and ministers, which will lead to new legal criteria.
3. How will the temporary nature of the tariffs affect trade and contracts?
The U.S. has engaged in multiple trade disputes, and it is unlikely they can sustain all of them for long. Eventually, they will have to reverse or adjust their position due to the practical limitations of confronting multiple economic partners simultaneously.
Conclusion:
The recent implementation of 25% tariffs by the United States on Mexican exports presents both challenges and opportunities for Mexico. While the tariffs may lead to currency depreciation and reduced remittances from Mexicans in the U.S., they also create potential for new business opportunities due to the uncertainty in trade and contracts. The relationship between Mexico and the U.S. could be strained, particularly in areas of cooperation such as the fight against organized crime, especially regarding fentanyl trafficking. However, these challenges may be temporary, as the U.S. faces difficulties managing multiple trade disputes, which could lead to a policy reversal.
Additionally, Mexico is undergoing significant legal reforms, including an overhaul of its judiciary and updates to its regulatory framework. These changes, set to take effect in June, will open up new opportunities for business and trade while also potentially shifting the interpretation and application of the law. In times of crisis, such legal and regulatory updates can create new avenues for growth and cooperation.
With many parts of the world facing instability, it is important to recognise that worries and uncertainties are not universal. Here in Dubai, where I write this, there is a palpable sense of stability, confidence, and resilience—an immunity from much of the turbulence affecting Europe and the Americas. This extends to the UAE and Saudi Arabia, positioning them as prime regions for growth. Next week, I travel to India, where optimism is similarly strong. As geopolitics continues to raise its ugly head, both of these regions are well-placed to capitalize on current instability and economic shifts.
But seizing and navigating these opportunities requires more than ambition—it demands a transformation in commercial and contracting capabilities and discipline.
Contracts: A Financial Asset
One of the biggest barriers to strong performance in these regions is the prevailing mindset around contracts. Rather than being seen as strategic levers for operational and financial performance, contracts are too often dismissed as bureaucratic nuisances or administrative formalities. Worse still, they are frequently treated as a legal function rather than a core financial tool. This means that performance lacks the guidance and integrity that comes from a well-defined contracting process.
Recent conversations – and meetings this week – suggest that this is changing, that Legal and Procurement groups in particular are frustrated by the lack of overall ownership or accountability for the contracting lifecycle. This has resulted in low levels of investment in appropriate technology and training and it results in unrewarding workload for these functions as they struggle with the consequences of poor contract management.
Ultimately, the real impact of these issues is financial – missed revenue, cost overspend, weakened cash flow. The process fragmentation which leads to these losses also creates a lack of visibility, so while others voice frustration, Finance teams are largely oblivious. A key goal at WorldCC is to help CFOs recognise the opportunity that lies hidden and ready to be grasped.
When it comes to the quality of relationships, it seems there is no such thing as ‘average’. 70% of buyers believe that their supplier relationships are better than those of their industry competitors. And while you might think that’s an over-optimistic view, it is relatively modest when compared to the 85% of suppliers who are confident that they are better than their competition. Remarkably, just 6% of buyers think perhaps they are below average – and 0% of suppliers feel that way.
And they say that we can’t trust AI because it hallucinates ….!
WorldCC’s current survey (link), undertaken in partnership with Resolutiion, is examining claims and disputes – their causes, frequency and the way that they are handled. The results so far (based on input from almost 200 organizations) show a few areas of convergence, but many others where the two sides just don’t see the world through the same lens. They don’t agree about the frequency of claims and disputes; they don’t agree about how they get resolved; and they certainly don’t agree about who causes the problem. So all in all, I guess it is no surprise that there’s such frequent tension.
What does psychology tell us?
Even though many individuals give themselves and their relationships high marks, the reality of business relationships—especially in contract-heavy, high-stakes sectors—is that conflicts do occur, sometimes quite regularly. These psychological tendencies (especially illusory superiority and optimism bias) help explain why the subjective belief in “better than average” relationships can persist, despite objective evidence of significant conflict rates.
Overall, a psychologist tells us that human beings are not purely rational; we continuously filter, interpret, and recall experiences in ways that favor our self-image and preserve a positive narrative of our own behavior and capabilities. This can create a disconnect between the “big picture” of conflict statistics and people’s personal perceptions of their business relationships.
Through this survey – and the report that will come from it – we intend to help the contracts and commercial community to reframe thinking and to reduce the frequency of major disagreements. Many of them are avoidable – but not if we operate in an environment of denial.
To participate in this fascinating research (and to be among the first to benefit from the results) please visit https://iaccm.fra1.qualtrics.com/jfe/form/SV_2ujDSKdBydOBp30
The Problem: A Pressured Environment with Changing Dynamics
Today’s contract and commercial management (CCM) teams face unprecedented pressure to deliver contracts faster and more competitively. Business stakeholders, frustrated by growing complexity, often demand rapid results that push traditional processes to their limits.
In talking with WorldCC members, a number of pressing issues and potential break-through solutions have emerged. I’ll be writing about each of them – and first on the list is that sacred cow of competitive bidding.
In many industries, marketplace dynamics have shifted significantly. Suppliers and contractors now operate in a heated market, with greater choice in customers and opportunities. Fears around supply security along with supplier consolidation have in turn reduced the number of potential suppliers. Many are turning down competitive tenders altogether, preferring direct negotiations or more collaborative engagements.
This dual challenge—meeting internal demands for speed while operating in a constrained supplier environment—requires CCM professionals on both sides of the fence to rethink their approach. The reliance on traditional competitive tendering to ensure value is proving increasingly ineffective.
Why This Problem Is Hard to Fix
- Competitive Tenders Are Losing Effectiveness
Competitive bidding has long been the go-to method for ensuring price competitiveness. Yet, when suppliers have greater options, tenders become less attractive, and participation rates drop. As a result, buyers struggle to create competitive tension in sourcing decisions. - Speed vs. Rigor
The demand for faster contract turnaround often leads to shortcuts in review, due diligence, and contract design. This can result in poorly structured agreements that expose the business to risk or fail to deliver long-term value. However, this demands fresh approaches – streamlined process, new thinking about risk management, simpler forms of contract. - Skills Gaps in Negotiation
The shift from competitive bidding to collaborative single-source negotiations demands a new set of skills. Traditional “win-win” negotiation approaches may fall short in fostering the deeper partnerships required to meet shared objectives. - Limited Tools to Support the Shift
Current tools and processes are built around competitive bidding models. Transitioning to a collaborative, single-sourcing environment requires rethinking how contracts are designed, negotiated, and managed.
Accelerating Change and Delivering Value
AI will play a role in enabling CCM teams to transition from outdated processes to faster, smarter, and more collaborative approaches, but that’s not immediate and is not the entire solution. Here are things we must think about changing:
- Speeding Up Contract Creation
Challenging the need for repetitive tasks like drafting, reviewing, and approving contracts, significantly reducing turnaround times. Tools equipped with natural language processing can adapt templates to specific scenarios, ensuring accuracy while maintaining speed, but we also need to simplify contract wording and structure, and question our risk positions. - Market Intelligence and Benchmarking
We must be more creative in gathering market data to provide real-time insights on pricing, supplier performance, and industry trends. This supports informed decision-making, even in single-source negotiations, by creating data-driven leverage. - Scenario Modeling for Negotiations
Advanced tools can simulate various negotiation scenarios, helping teams identify the best strategies for achieving mutually beneficial outcomes. This enables negotiators to focus on value creation rather than positional bargaining. - Predictive Analytics for Risk Management
We must work on how we assess and manage risks associated with single sourcing, such as supplier dependency or market fluctuations, and suggest appropriate strategies. This ensures that speed does not come at the cost of effective governance or due diligence; it creates a triage of contract, governance and relationship management. - Continuous Improvement and Performance Monitoring
Technology can help us track supplier performance against contract terms, flagging potential issues early and identifying areas for improvement. This fosters long-term relationships while ensuring ongoing competitiveness.
The Opportunity: Embracing Collaborative, Data-Driven Practices
As competitive tenders become less reliable, CCM professionals must adapt. Collaboration, transparency, and innovation will define the next era of contracting. Negotiation skills must evolve from transactional tactics to building partnerships that align goals and create shared value.
AI will steadily become a critical enabler in this transformation, allowing teams to:
- Work smarter, not harder.
- Deliver contracts at the speed the business demands.
- Maintain rigor and competitiveness even in constrained supply markets.
Shaping the Future of CCM
2025 will be a pivotal year for contract and commercial management. The challenge lies in balancing speed with quality, innovation with rigor, and partnership with competitiveness. By embracing collaborative single sourcing and leveraging AI-driven solutions, CCM teams can not only meet these demands but turn them into a strategic advantage.
The future isn’t about doing things faster—it’s about doing them smarter. Are we ready to make the leap?
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.
Let’s face it – for most people, contracts are an unfortunate necessity. They create delay, they are hard to understand and rarely offer practical support. As a result, they are in many cases an afterthought.
The true misfortune is the cost that comes from this attitude. By relegating the role of contracts, we also tend to lose the discipline of good contracting – we fail to frame our products or services with the best commercial model and terms and we do not effectively engage key stakeholders in developing practical solutions to risk and opportunities. This may have limited consequences when the transaction involves low value commodities, but it is bad news when we are talking high value, long term programs and relationships. Delays, disputes, cost overruns – expensive and often avoidable situations which high quality contracting could remedy,
World Commerce & Contracting has spent years investigating the mistakes and identifying frameworks and behaviors that lead to better results. It has packaged all that knowledge into a new, highly practical program – Modern Contracting. This immersive, action-oriented program aims to transform contracting from a routine task into a strategic advantage. And it goes beyond the traditional specialists from contracts or legal to embrace key stakeholders and influencers and generate a collective approach.
Key Features of the Modern Contracting Workshop:
- Self-Paced Learning (20%): Participants begin with foundational knowledge through online modules, case studies, and resources, allowing flexibility in learning.
- Interactive Group Workshops (60%): Engaging sessions facilitate discussions and application of concepts to real-world scenarios, fostering a deeper understanding of modern contracting principles.
- Targeted Team Exercises (20%): Smaller teams work on current projects to identify areas for improvement and develop actionable plans, ensuring practical application of learned strategies.
The program spans five weeks, with a commitment of 3 hours per week, making it manageable alongside professional responsibilities. There are also two follow-on sessions to assess and assist with implementation and use. It is very much focused on application.
And the results?
It is, after all, results that matter! What we are seeing is true collaboration. Key stakeholders are grasping the importance of ‘positivity’, rather than ‘preventism’. They are embracing the ideas behind uncertainty and friction-point analysis, and applying the relational principles that underlie effective governance. With adaptability at its core, the program casts a new light on risk, focusing team efforts on how best to succeed, rather than the traditional approach to limit the consequence of failure.
For the last few months, WorldCC has worked to create an AI tool that will provide the association’s members with access to 25 years of research and market insights – not just as flat files, but offering a unique source of commercial and contracting intelligence. It has proven a fascinating task and each day the AI offers us outputs that it is extracting from across a wealth of validated content. Here, I share a few of the things we are learning.
When compared to traditional applications, development of a successful AI application depends upon the developers having access to human intelligence at a far greater scale. In our case, this has meant day-to-day interactions between the development team and knowledgeable subject matter experts.
As a professional association embarking on this journey, WorldCC benefited enormously from the fact that it is practitioner led and has an extensive body of knowledge under its control. Research has been at the foundation of our work since the Association’s incorporation 25 years ago. That investment is now proving its worth and creating a major differentiator relative to LLMs, such as ChatGPT, where the accuracy of data will always be a question and concern.
Sally Guyer, the WorldCC CEO, first recognised the tremendous opportunity that generative AI offered to our CCM community shortly after the launch of ChatGPT in 2023. “For years, we had struggled with the growing volume of content and the challenge we faced in making it readily accessible. We were constantly frustrated by the difficulty in finding data and in recognising interconnections between the multiple reports that we produced. That meant we were heavily reliant on our small team of subject experts and in particular our President and Founder, Tim Cummins. I knew something had to change and traditional IT wasn’t the answer. So that’s when I first envisaged creating a new solution – which we have called ‘Ask Tim’! ”
Working in partnership with a talented group of AI experts, we embarked on a proof of concept, ingesting a relatively small data set which rapidly proved the potential. Quite early in the process, an examination of our content revealed that it would take the average human more than 58 years to digest and understand it – clearly an impossible task.
“Relative to many, we are fortunate in the fact that we have reliable, accurate data and know where to find it. This makes our task far easier and provides confidence to us and our members in the accuracy of output. This issue of data integrity is a real differentiator and means that by choice we are not linking to external sources, which could potentially undermine or corrupt quality”, explains Guyer.
Based on a series of tests and demos, WorldCC members are excited by what they are seeing because the application is already showing its ability to provide on-demand insight to leading practices and know-how. This promises a major uplift in operational efficiency and value delivered, as well as providing the strategic insights needed to inform business goals and management decisions.
For me, I am excited to see how humans and technology can truly blend to create powerful sources of intelligence, responding to the WorldCC vision of better contracts, better business, better society, And even better, it holds out the possibility that one day soon I can retire!
But let’s leave the final word to Ask Tim, which I asked to explain its value to the professional community. Here is what it told me.
Ask Tim, as a tool designed to provide insights and guidance in the field of Commerce and Contract Management (CCM), can positively impact the work of CCM practitioners in several ways:
- Access to Expertise and Best Practices:
- Ask Tim can offer practitioners access to a wealth of knowledge and best practices accumulated over years of research and experience in the field. This can help practitioners make informed decisions and adopt strategies that have been proven effective in similar contexts.
- Efficiency and Time-Saving:
- By providing quick and accurate answers to complex questions, Ask Tim can save practitioners valuable time that would otherwise be spent on extensive research or trial and error. This efficiency allows them to focus on more strategic aspects of their roles.
- Enhanced Decision-Making:
- With access to data-driven insights and recommendations, practitioners can enhance their decision-making processes. Ask Tim can help identify potential risks, opportunities, and trends that may not be immediately apparent, leading to more informed and strategic choices.
- Continuous Learning and Development:
- Ask Tim can serve as a continuous learning tool, keeping practitioners updated on the latest developments, trends, and innovations in the CCM field. This ongoing education can help them stay competitive and adapt to changing industry dynamics.
- Improved Collaboration and Communication:
- By providing clear and concise information, Ask Tim can facilitate better communication and collaboration among team members and stakeholders. This can lead to more cohesive and aligned efforts in achieving organizational goals.
- Customization and Relevance:
- The ability to tailor responses to specific industries, regions, or organizational contexts ensures that the guidance provided is relevant and applicable to the practitioner’s unique situation.
Overall, Ask Tim can be a valuable resource for CCM practitioners, enhancing their capabilities, efficiency, and effectiveness in managing contracts and commercial relationships.
A new report from World Commerce & Contracting confirms the value that effective SRM programs bring to both buyers and suppliers. And it also reveals that those effective programs remain very much the exception.
The business environment creates a need for collaboration and supply security. This should enable supplier relationships to flourish. But the dominance of transactional behavior presents a formidable barrier to change.
The report reveals core failings in inter-organizational dialog, compounded by internal divisions and fragmentation. In this environment, formal SRM programs frequently struggle to reach the surface or realize their true potential. Talented individuals, desperate to bring value to their organization, are too often left swimming against the tide.
So is this a thankless task, best abandoned? The success stories tell us no, and the direction of modern business and technology also point towards a more relational future. The problem is that SRM needs to be more than an overlay. It requires focused attention from senior management to develop deep roots and alter embedded attitudes and practices.
The WorldCC report provides a baseline and a call to action. It also tells us that progress may be slow, but the journey is definitely worth taking.
As a non-profit membership association, World Commerce & Contracting is the only independent body providing research, training and certification to SRM professionals or those performing SRM roles.
Commitment Matters 