Routinely in B2B sectors, Supply Agreements can take upwards of 12-18 months to complete. The upfront negotiation is generally the exciting stage and draws the attention of many within an organisation. Once done and an “agreement in principle” reached, focus quickly turns elsewhere whilst a small contingent of commercial & legal people begin the lengthy and detailed process of hammering out a contract for final signatures.
It is an understatement to say that this can be both a difficult and detailed task to complete.
When finally signed copies of the completed “Contract” are exchanged, they are routinely assigned to a physical or virtual filing cabinet. The cabinet is locked, sealed and placed deep down in a remote basement, like the one Agent Maxwell Smart enters in the opening credits of “Get Smart”. There they remain until the contract expires or gets retrieved to be used as the basis for the next negotiation.
Is this OK?
Many hold that the frontline staff on both sides of the agreement know what needs to happen daily and just ‘get on with it’. Forecasters forecast; Production produces; Quality ensure quality; Logisticians provide logistics & Accounts Receivable receive.
What could possibly go wrong?
Unfortunately, plenty. Things happen in manufacturing. Force majeure; demand exceeding supply; power grids collapsing; quality failing; payments not arriving & the proverbial well and truly ‘hitting the fan’.
It’s in these “clutch” moments that considerable monetary, reputation and relationship value can be lost and P&L’s severely impacted. Companies that operate with functional silos are most susceptible. Under pressure, people revert to instinctual behaviours, less so contract clauses.
Surely, such things are unpreventable?
Possibly, but how organisations prepare is what matters most. By not engaging cross functional staff and sharing what role specific contractual obligations entail, organisations forsake the opportunity to empower people to proactively manage their delivery in all conditions.
What’s the alternative?
One answer can surprisingly be found in a book titled “A season with Richmond”, by Konrad Marshall. In Chapter 36, Marshall writes about the role Ben Crowe played during Richmond’s 2017 season. His defining contribution was to have the club embrace the concept of personal connection being the last “untapped competitive advantage”. And ‘connect’ the club did. All the way from Players to President and through to the Boot cleaner (you’ll recall the club won the flag for the first time in 37 years!).
This principle is readily applied to Business and starts with the unlocking of contracts, only ever seen by some chosen few. By routinely bringing cross functional account teams together and allowing them to openly view and consider what the contracted game plan is with their Supply (or Customer) counterparts, connectedness is created. Jason Mahoney from Kantar considers this a foundation of Key Account Management, but I believe it’s more.
When account teams know what the function by function contractual view of “good looks like”, they can constructively hold themselves and their Supply partners accountable to it at a granular level. This is where material Value can be transparently secured, enhanced and if need be, traded. Secondary benefits will see Silo’s reduced, employee engagement increasing and maybe, premierships won!
In conclusion Uncage your contracts. Remove sensitive information if you must, but bring cross functional account teams together and let them thrive in the shared delivery and responsibility of contract fulfilment.
About Margin Partners
We identify the value that goes unaccounted for within B2B supply agreements. Our process allows clients to identify where margin “loss or gain” is occurring & to better prepare for future contract negotiations. Typically, 15% of extra value can be apportioned within 90 days.
Contact us here for an initial conversation.
