As Procurement Pros, we tend to dislike the contracting phase, often pointing fingers at the Legal team for their perceived slowness and rigidity.

In my career, I’ve had to define, negotiate, and sign many contracts. In many cases, I viewed this as a necessary yet arduous process. I’ve come to realize that, for quite some time, I had the wrong approach, contributing to the inefficiency of the entire process.

First Attempt In Learning

There are several factors contributing to an inefficient contracting process:

1. Delaying contract negotiations until after the supplier has been awarded is a common and very harmful practice.
2. Lack of standardized templates often leads to reinventing the wheel.
3. Attempting to transform a “vendor” contract into a “buyer” contract rarely works in practice.
4. Instead of producing a practical, legally sound document, we sometimes create legal “monstrosities.”
5. Following a purely legal-centric negotiation path often results in very lengthy email chains ending with unclear agreements.

The good news is that a few simple measures can significantly improve contracting activities. It just required willingness and some discipline.

We can:

• Collaborate with the Legal team to define the criteria for mandatory contracts, striking a balance between potential risks and workload.
• Maintain a contract database with renegotiation dates to be able to plan far in advance the activities. 
• Develop a library of standard contracts or clauses related to our Procurement categories, alongside a few general terms and conditions templates.
• Initiate early engagement with Legal at the start of the RFx process.
• Include a draft template in the RFx and request suppliers to provide initial redlines as part of their offers.
• Before awarding a supplier, arrange a “contract negotiation” meeting (more a marathon of several hours in real life) involving key team members from both sides, including the buyer, the key account manager, and the two legal representatives, to force the contract finalization in a single meeting.

My hints

✅ Collaborate with the Legal department to establish a joint framework based on key principles and an action plan for mutual improvement.

✅ Prioritize the most valuable cases for full-fledged contracts. For the rest, we can rely on general terms and conditions. Start small and clever then scale.

✅ Implement distinct signature rules based on contract types to minimize double signature processes.

✅ Rigorously distinguish the core contract from its appendix by including all parameters subject to change in the appendix. This dramatically simplifies the revision of the contracts.

✅ Ensure you have a written process and then use contract mgmt. tech solutions to make things easier and deep dive into contract analytics.

There are dozens of good tips on contracting.

• Any lessons learned to share❓
• Any recommendations❓

Contact Mr Stéphane Morel at LinkedIn.

Confident Contracting at Learn How to source

At Learn How to Source, we believe that every buyer should feel confident and informed when dealing with contracts. That’s why we’ve created a special section on our blog dedicated to helping you take the first step towards mastering contract clauses. By selecting the “Contract Clause” tag on our blog, you’ll find a series of posts designed to demystify these crucial elements of international contracts. In the post Contract Clause: Your First Step Towards Confident Contracting there is more information.

Each blog post under the “Contract Clause” tag is a micro-learning experience focused on a specific clause. Our goal is not to turn you into a contract lawyer, but to give you the understanding you need to confidently engage with suppliers and speed up the agreement process.

Note: Illustration to the blogpost “I failed at contracting. Tips from Stephan Morel” was created by Stephane himself.