Contract Performance Management

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The Co-Operative
2020-07-08 10:48:57

Logistic Services

Who has examples of lost value through sub-optimal sourcing / contracting and ongoing management of logistical services from a "buy" side?
 •  IACCM  •   2020-07-08 11:22:56
Hi Grant,
You will find a range of articles related to this in the International Journal of Logistics Research & Applications (www.tandfonline.com/toc/cjol20/current). Though some of the papers are dated, many of the examples remain valid.

You may find this article useful www.nl.dsv.com/en-gb/expert-insights/logistic-contract-management-pitfalls.

The following quote reflects the message we typically hear from the industry:

"Going forward, the industry as a whole needs to change the way contracts are perceived. Instead of the blood sport it has become, we need to move toward collaborative, results-oriented negotiations. Contracts need to be about creating value between partners rather than extracting value from one partner. They need to be based on outcomes and desired results and shared risks―and both parties need to share risk in a way that is proportional to the commercial benefit of the agreement. If we can get to a more collaborative environment, we will have healthier, more long-term contracts that breed innovation and create long-term value. That will improve the industry as a whole.'

COVID-19 clearly proved highly disruptive to the logistics sector and often resulted in new levels of communication and flexibility in buyer/supplier relationships - and sometimes even between suppliers. We have yet to see whether any of these more collaborative practices survive, but this seems to be a sector where the buyer could set a different tone, perhaps orchestrating increased focus on outcomes and developing a more 'integrated ecosystem' approach to its sourcing and contracting model.
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