IACCM Contract Management Forum

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Surrey and Sussex county councils
2017-05-22 09:45:50

Supplier Contract segmentation

Is anybody aware of any dynamic tools for contract segmentation ?

What I am trying to achieve is to segment my contracts by the normal risk, complexity, value etc but I then want to overlay service/business unit specific criteria e.g. opportunity to service/business area in things like innovation, whether the relationship is growing in the future, standing still or declining etc

I want to do this dynamically in order for the service/business area to understand the dynamic nature of contract management, the resources demands and potential skills gaps they may have.

Any help greatly appreciated.
 •  World Commerce & Contracting  •   2017-05-22 11:39:06
Hi Keith, this is a very interesting question and I am glad you are undertaking the exercise.

I haven't come across a dynamic tool that would support the sort of pre-analysis you suggest, although it may be that you could adapt one of the systems used by marketing to undertake customer segmentation. Another approach could be to build relevant questions into whatever requirement definition tools you use, cuasing the business to consider the points you make regarding issues such as innovation, likelihood of change etc

In working with another IACCM member, we have developed a model that looks at three core levels of relationship and then overlays the extent to which there is potential uncertainty which would impact the nature of the relationship / terms required. I'll be pleased to discuss with you and share ideas..
 •  VicRoads  •   2017-05-27 04:24:07
Hi Keith. I'm also unaware of the existence of such tools.

My suggestion (assuming you haven't done so already) is to align your organisational objectives with the business cases, service specifications that were developed during the tender process, justifications for contract variations, etc. Once this has been done, identify the commonalities across the service spectrum and then compare against the performance of each contractual arrangement including the extent to which the service is being successfully delivered and then how this may relate to the business activities of the individual business unit. No mean task!

Understanding contract management within broader organisational strategy and commonality that exists between contracts is likely to yield insights into what you're trying to achieve e.g. innovation, appropriately skilled staff, etc. And by taking such an approach, it may increase the likelihood that decision-makers outside of your own business unit who may also benefit from this work will support your efforts more readily.

You may also find as a result of using this type of analysis, the requirement for knowing whether the relationship is growing, etc becomes less relevant as an end in itself - assuming of course that the appropriate aspects of organisational strategy are being delivered as intended through its contractual arrangements and that risk appetite for further value / profit-seeking under each or multiple contract(s) is not being exceeded, and is being properly managed.
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