Loading...
 
 

Agility, contracts and value: time for new thinking

Published: 23 Sep 2019 Average Rating: 4 / 5 Print
 

Author: Tim Cummins

Agility is defined as 'the ability to move quickly and easily'. It is an attribute that today's business considers highly desirable, yet typically struggles to achieve. Research shows this is particularly true for the contracting process and the management of external relationships.

Agility in the context of contracts

'Agile contracts' are typically thought of simply as a form of agreement that supports the parties in undertaking agile performance. But of course, preparing an agreement is just one small component of the overall transaction or relationship and enabling agility through a set of contract terms is very different from actually being agile.

There is little question that most people would like their trading relationships to be agile. Quick and easy to identify the right supplier or customer; quick and easy to reach agreement on the terms; quick and easy to undertake delivery; quick and easy to make changes or secure improvements. But as IACCM's 2019 Benchmarking Study shows, 'quick and easy' is not a description that can often be applied to the overall contracting process. While the simplest transactions  (such as buying off Amazon) may be 'agile', as soon as something enters the more formal sales and procurement process it becomes subject to delay and complications. And even when one aspect of that process has been made 'agile' (for example a catalog buy), it doesn't guarantee that other aspects of the downstream process have the same characteristics.

Tackling a mismatch

One major finding by IACCM – and now the subject of further in-depth research – is the fact that the contract terms and the governance models used to support each trading relationship are frequently not 'fit for purpose'. There is, quite simply, a mismatch between what the parties want to achieve and the contract and contract management model that they deploy to achieve it.

Ironically, one major reason for this turns out to be that efforts to be 'agile' in  entering into the contract result in overall rigidity and loss of flexibility in its performance. Specifically, both buyers and providers tend to be wedded to the use of standardized contract templates that are frequently designed to limit agility and which are themselves not readily adjusted to reflect specific aspects of the required relationship.

Becoming agile

Agility is itself often seen as complex. IACCM's work with a group of major corporations (its Ressarch Forum members) is proving this not to be the case. What is perhaps the most challenging aspect is finding people with the mental agility to recognise that they really can make things better!

At a forthcoming series of mini-conferences, starting this week in India, IACCM will be inspiring its members with the insights they need to drive new conversations and discover new levels of agility and value in their trading relationships. Key to this is starting to think and act holistically in managing the contracting process.

 
 
 

Related Discussions

Please sign in or register to post on this forum

Tata Consultancy Services (TCS)
2019-10-15 04:20:49

Consideration Amount for Variation Agreement

For Variation Agreement, is it necessary to mention some consideration amount (e.g. $1 in the below example) to make it binding/legitimate even if the consideration am...
 
 
 
 
 
Replies: 4

Tata Consultancy Services (TCS)
2019-10-15 03:48:28

Assigned vs Novated Contracts

Can someone please clarify whether there is any difference between "assignment" and "novation" of Contracts? I've seen many contracts where th...
 
 
 
Replies: 2

New International Technology Co.
2019-09-09 07:32:07

ANTI TRAFFICKING TERMS / RECRUITMENT FROM ABROAD

Good morning, we want to include anti-trafficking terms in a Recruitment Agreement, focusing on the requirement of fairness of the entire process and in particular the...
 
 
Replies: 1
Anonymous
2019-09-06 18:56:36

Difference between Terms and Conditions

Can anyone explain me the difference between Terms and conditions with an example?
 
 
 
 
 
Replies: 4

sussex university
2019-08-15 09:05:18

Telecoms relationships - moving to Cloud / getting the most our of hosting partners

Does anyone have experience of Contract Planning re hosting agreements/telecoms partners/moving to cloud? It would be great to form a bit of a support group/knowledge ...
 
 
 
Replies: 2
Anonymous
2019-08-06 08:53:51

EPC Contract Payment Mechanism

I am looking for pro's and con's of introducing a mile stone based payment mechanism for an EPC Contract compared to Progress based Payment mechanism
 
 
Replies: 1