The key to transitioning from a Reactive Purchasing Department to a Strategic Procurement Organization is a pro-active approach to contracting management. The goals of a world-class supply management organization require that more long-term agreements be established with a fewer number of key suppliers. This is a much-ignored aspect of supply management performance, however, as illustrated by the following quotations:

• “The average Fortune 1000 company has between 20,000 and 40,000 active contracts, up 20% in the last 5 years” (Institute for Supply Management)
  
  
• “Contract management is where finance was 30 years ago” (Oracle)
  
  
• It is estimated that 10% of contracts across all industry sectors are lost. Many companies say they regard this as inevitable, and that dealing with the consequences is simply a cost of doing business. They are wrong. This is a cost of poor business.” (PriceWaterhouseCoopers)
  
  
• Contracts are not reviewed properly – although at least one in four represents a potential opportunity to reduce costs” (PriceWaterhouseCoopers)
  

• “Organizations which don’t manage their contracts effectively will be at a tremendous competitive disadvantage” (The International Association of Contracts & Commercial Managers – IACCM)
  

• “The scariest thing is that nobody knows exactly how much they lose with their manual contract management practices” (MEMBA)
  

• “ERP solutions only cover 20% - 30% of the needs of most organizations. Time to manage those contracts!” (Goldman Sachs)

• “The past decade has seen a revolution in the role of contracts – transforming them from purely legal necessities for protecting against worst-case outcomes, into tools for optimizing ongoing business relationships. The way they are managed must be transformed too”. (PriceWaterhouseCoopers)

Strategic Procurement Solutions' partners are skilled in helping organizations transition to a pro-active approach to contracting management, through a combination of the following services:

• Contract Inventory Assessment: We will perform a thorough analysis of a client’s contract inventory, with quantified assessment of Legal Exposure, Required Activity Ratio, Term Administration, Industry Fit, Expiration Exposure, Standardization, Expense Base Capture, etc.

• Agreement Development Process: We will map a client’s contract development process against "best practices" to identify optimization opportunities, legal support fee reductions, & other areas of improvement.
  

• Pro-Forma Agreements: Critical to success for today’s procurement organization is the possession of a concise set of pro-forma contracts to be used as a basis for negotiations. We will work with clients and their legal teams to develop concise, industry-acceptable, and comprehensive set of "pro-forma" contract documents. We will also help clients develop an optimum RFP document for use in a hard-copy or on-line environment.

• Administration Techniques: Typical procurement departments lose amazing amounts of value through inattention…too many agreements expiring each year, agreements expiring at the same time, "evergreen" roll-overs with uncontrolled escalations, terminations without purchasing involvement, etc. We apply common-sense solutions to each client’s inventory.