Month: December 2018

Once the difficult work of sourcing a supplier is completed, where does your contract go?

For all too many teams, it’s into a filing cabinet or a locally-stored spreadsheet, out of sight and out of mind. Without clear visibility over your active contracts, it’s difficult to keep on top of milestones and ensure contractual obligations are being met — let alone monitor performance or build vendor relationships.

Contract management is a key piece of the procurement puzzle. Here are three examples of how a proactive contract management process can benefit your organization.

Manage contract costs and changes

American City and County reports that the majority of contracted projects end up with schedule delays and cost overruns. A certain amount of change is to be expected — in fact, a study from National Association of State Procurement Officials indicates that a 20% increase in contracts is considered typical.  Nevertheless, it’s imperative for teams to be able to effectively track their contracts in order to ensure contractual agreements are being fulfilled and delays or changes are kept to a minimum.

Columnist Darin Matthews, director of procurement for University of California Santa Cruz, advises, “Stay involved with your contracts, even after award. Make sure you are not the last one to know about any changes or increases.”

In terms of metrics, he recommends tracking the awarded contract value vs. the final contract value, in order to be able to demonstrate the value your team is bringing to the organization.

Consolidate contracts for greater impact

With clear visibility into their contracts, public officials are able to proactively identify areas of overlap or inefficiency and maximize the impact of taxpayer dollars.

A good example of this in action is Seattle’s recent reform of their process for contracting homelessness services, as reported in Governing Magazine. The city worked with Government Performance Lab to drastically reform their contracting process for homelessness services, and the first step was consolidation of existing contracts.

Before embarking on this process, the city had more than 200 separate contracts with 60 providers for homelessness services — one provider had 18 separate contracts. Not only was this fragmented for the city, the lack of funding flexibility was an obstacle to service providers in efficiently supporting the needs of the populations they were trying to serve.

They consolidated 26 contracts held by five providers into eight contracts, offering more flexibility to providers and better value. This was an important step in kicking off a process of contracting reform, which included establishing performance metrics and instituting a results-oriented approach to their contract management.

Use data to promote better contract outcomes

With contract management streamlined, teams are able to more effectively use data to collect and improve delivery of their contracted services. This includes not only troubleshooting immediate concerns to keep contracts on track, but also working with contractors to share performance information and continuously improve performance.

As described in this Governing article, the contract management approach that works for some contracts are counterproductive in other types of contracts. For example social services contracts require a more active and continuous approach to move beyond simply checking compliance to be able to continually progress towards outcomes established for the target population.

Once contracts are centralized and the administrative steps streamlined, teams are able to adopt a more strategic approach to their contract management, such as performance-based contracting or results-driven contracting.

Learn more about how Bonfire’s Contract and Performance Management solution helps you stay on top of your active spend.

In a world where technology has continued to improve the way we communicate and gather feedback, why shouldn’t your vendor performance management be as simple and easy?

In brick-and-mortar businesses, wooden suggestion boxes have been replaced by online reviews or kiosks where customers can hit a ‘smiley-face’ button to signal their satisfaction. Businesses can solicit feedback from customers in a way that is convenient and simple for the customer (leading to better response rates) and prompted in the moment when their experience is top-of-mind (leading to more accurate responses). Rather than gathering dust in a box, feedback is collected in real-time, so managers can observe changes and intervene to correct negative trends.

This same approach can take your vendor performance management efforts from a bureaucratic check-box, to a source of valuable insight into contract health and performance trends. 

The case for more user-friendly vendor performance feedback methods

Vendor performance is just as important to procurement teams as customer experience is to restaurants: it can cost time, money, and internal client satisfaction.

However, many procurement teams simply don’t have the bandwidth to collect feedback on vendor performance—and if they do, the standard approach and tools can look suspiciously like the customer suggestion box: long, complicated surveys with low response rates, sent out manually and infrequently.

To be proactive and stay on top of their suppliers’ performance, procurement leaders need to have a finger on the pulse of their supplier poll. This requires a constant stream of data and information so you can determine trends and insights at a glance.

Technology can help you streamline and simplify your vendor performance management activities. Here are some of the reasons you need to evaluate the way you conduct your process:

• Getting to actionable conclusions faster. Vendor Performance Management solutions take care of the manual parts of soliciting vendor performance feedback (creating and sending surveys, collecting and aggregating responses), so procurement teams can maintain an up-to-date picture of their vendor performance without the tedious and time-consuming work.
• Intervening with performance issues before they become a problem. Frequent feedback gives procurement teams more visibility into the progression of contracts, allowing teams to zero in on performance issues before they impact the organization.
• No more pulling teeth to get survey responses. As many teams have learned from experience, getting contract owners to fill out vendor performance surveys can be a headache. Modern survey methods meet stakeholders where they already are—and in today’s world, that means mobile devices—and reap the rewards in their response rates.

See how Bonfire Vendor Performance Management helps you drive continuous improvement in your vendor relationships.