muniBLOG: Administration

Cost Savings and Contract Management in Q4

The Importance of Contract Management when Analyzing Spend

 

When my clients ask me to help identify areas of opportunity for cost reduction with their existing suppliers, I ask two questions:

 

1.     Where are your contracts?

 

2.    How much do you spend?

 

The first question usually gets a lot of blank stares, shrugging shoulders and a general sense of helplessness.

 

The second question generates massive spreadsheets from the finance department, listing every supplier that ever submitted an invoice and got paid.

 

But the spreadsheets don’t give the specifics about what was purchased or the underlying contractual obligations.

 

And the reality is that, without a solid understanding of the existing terms and conditions, it’s difficult for any organization to negotiate cost reductions with their suppliers.

 

Unfortunately, many of the consulting firms that are hired to find cost savings opportunities fail to mention the importance of contract management as an underlying prerequisite to spend management.

 

Instead they spend months sifting through a client’s financial data and produce impressive graphs and charts that show exactly where the opportunities are. All the client has to do is consolidate, renegotiate or cancel contracts in order to reduce spend.

 

But by the time the client realizes that they need to first find and understand their contracts, the consultants are either long gone or walking through the door with one of their ERP systems vendors who just happen to have the perfect (expensive, complicated, hard to implement) solution for contract management.

 

The reality is that contract management doesn’t have to be expensive, complicated or hard to implement, as long as an organization understands what it really needs.

ERP Systems

Enterprise Resource Planning (“ERP”) systems weren’t developed for contract management.

 

 ERP is business management software intended to collect, store and manage data from various business activities.

 

The system typically consists of a suite of modules that can be bundled together, or added on at a later date, to give the client an end-to-end solution.

 

Suppliers that sell a contract management module as part of their ERP system highlight 3 key benefits of their product:

 

1.     The client can create contracts from within the module, utilizing corporate standard terms and conditions, thereby eliminating the need to work off a supplier’s paper

 

2.    The client can produce reports and summaries of the contracts stored in the system

 

3.    The module seamlessly integrates with other modules (procurement, accounts payable, asset management, etc.) to provide a complete end-to-end solution

 

However, if we take a closer look at each of these 3 supposed benefits we see something different.

 

1.     Contract Creation – I’ve been managing and negotiating contracts for almost 20 years. The way lawyers drafted contracts when I first started is the same way it’s done today, and I suspect that’s the way it’ll be done for the next 20 years. I’ve seen many contract management modules implemented at various organizations but I’ve yet to see one that’s actually used.

 

2.    Reporting – Reports and summaries are only as good as the data used to create them. Garbage in, garbage out. ERP modules require manual data input into a lot of different fields across a lot of different tabs. This makes sense when dealing with numerical data such as financials or asset management, but it’s almost impossible with contracts. ERP systems produce very impressive financial reports but are utterly useless when trying to summarize contract data.

 

3.    Integration – The suggestion that the contract management module will seamlessly integrate with other modules is misleading, at best. At worst, it’s just a way for the supplier to sell more modules. The truth is that any module will only provide seamless integration with other modules within the same ERP system AND as long as there’s no customization. However most organizations don’t go all in with one ERP solution for all of their business management needs and they will almost always need customizations for the modules they do buy.

 

 

So what does an organization really need for contract management?

 

The Simplicity of Contract Management: What you really need

 

Most organizations, big and small, only have a handful of real requirements for contract management:

 

1.     Summary – Once a contract has been countersigned and returned, most organizations require a summary to be sent (along with a copy of the final document) to key individuals and departments such as the CEO, CFO, Legal and Finance

 

2.    Storage – The final version of a contract needs to be stored in a secure location that can only be accessed by authorized personnel

 

3.    Ease of Access – Most contracts that are signed and stored will never be read again, unless there’s a breach. However some contracts (usually IT) have renewal dates, service levels and milestones that need to be reviewed regularly

 

4.    Alerts – Organizations need to know when contracts are coming up for renewal so that they can plan for the cost to renew, as well as any renegotiation that may be needed.

 

A simple tool that addresses these 4 basic needs for contract management will be more than sufficient for most organizations and the cost will be exponentially less than an ERP module.

 

OneView

 

With Q4 around the corner, I’ve been talking to a lot of executives about the impact contract management’s having on year-end cost savings initiatives in the post-COVID environment. 

As one executive recently told me “…one outcome of remote work is that it exposed flaws in our processes that we just ‘made work’ when we were in the office”. 

It was an interesting comment that really drove home a point I’ve been making for some time…less is more when it comes to contract management. 

The reality is that expensive, complicated ERP systems just don’t make sense anymore which is why I truly believe the solution I designed and built, OneView, gives procurement teams everything they need when it comes to contract management…for pennies on the dollar.

If you would like to know more, feel free to message me directly at [email protected]

 

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How to Negotiate With Your Existing Suppliers

“If you know the enemy and you know yourself, you need not fear the result of a hundred battles”

–       Sun Tzu, The Art of War

 

When it comes to negotiating with a supplier you know versus a supplier you don’t, the tendency is to prefer the one you have an existing relationship with.

 

There could be several reasons as to why this would make the most sense:

 

–       Renewing an agreement for goods and services that are already being provided.

–       Engaging a supplier who is already on site for time-sensitive work

–       Leveraging pre-negotiated terms, conditions and/or pricing

 

However, these are not the most common reasons for businesses to prefer their incumbent suppliers to new ones.

 

The main reason we negotiate with incumbents is because we know them.

 

When I needed new tires I asked my mechanic what he would recommend, since he had been servicing my car for the last 6 years. Tires were not his specialty and I knew I would pay a premium by having him find and purchase the tires for me. But I also knew that he would recommend the best tires based on his knowledge of my car and the way I drive it.

 

Similarly, we tend to prefer looking to our incumbent suppliers for solutions to our problems because we feel that they will recommend what is best for our organization based on their knowledge and experience from having worked with us.

 

This makes complete sense, and in most cases would be the recommended approach. The goal should be to have 80% (or more) of your annual spend go through your top 20 suppliers.

 

But this should not mean that we forego the negotiation. A healthy supplier relationship is built not only on trust, but also on transparency and mutual benefit. Good suppliers understand this and are willing to open up discussions for a mutually beneficial agreement. The rest are looking to make a quick buck at their customer’s expense.

 

I recently had the good fortune and misfortune of representing a client in negotiations with two very well known software suppliers. The client had acquired another company through a divestiture and both suppliers were incumbents of the divested entity.

 

One supplier came to the table in the full spirit of partnership. Their team brought forth all of the knowledge they had gleaned over the years in licensing their products to the divested entity. They understood the architecture and proposed solutions that would allow my client to maximize their investment. They also provided industry insight that demonstrated an understanding of my client’s business beyond what their software did.

 

The other supplier pointed to their existing license agreement with the divested entity and stated that, since it did not allow for assignment of licenses, my client would need to re-purchase all of the licenses that were currently installed or face legal recourse.

 

In the end, we negotiated a short-term agreement with one supplier and established a longer-term strategic partnership with the other.

 

I will let you guess which supplier my client no longer uses.

 

Leveraging existing relationships doesn’t mean giving in to the incumbent’s demands, but rather negotiating mutually beneficial agreements with the suppliers that want to be true business partners and not just vendors that sell you things.

 

Have you recently negotiated with an incumbent supplier, or are you preparing to do so anytime soon? If so, I would love to hear about any challenges you’ve had to overcome or tips you may have for the rest of us.

 

OneView

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We are all facing Austerity…and here’s how procurement can help

A friend of mine recently asked me to explain austerity measures to him

 

So I said it’s like this…you know how you told your wife you needed a new set of clubs because that’s what was missing from your golf game

 

And she said fine, but then you should also let me know which of your three daily meals you’re going to give up 

 

Because we can’t afford to have you running around on a golf course pretending to know what you’re doing AND eat like a king at home

 

Well, that’s austerity. Now the term’s typically used in reference to governments that are finding it hard to borrow money or pay back loans

 

So they introduce austerity measures like increased taxes and spending cuts which then impacts a households disposable income…breakfast or golf?

 

But austerity doesn’t just impact the public sector or limits itself to the Federal government 

 

Like when corporations find they have to pay more taxes, they try to counter-balance that with either more revenue or less spending

 

But it’s always easier (and faster) to cut costs then it is to increase sales

 

And this is where our jobs as procurement and supply chain professionals becomes so critical

 

Never has it been more important to make that shift from tactical purchasing to real strategic sourcing and vendor management

 

Before the pandemic, that shift would have occurred in one of two ways

 

Either the organization would mandate a greater focus on strategic, cost savings activities while maintaining business as usual on the tactical purchasing side

 

Or they’d bring in outside help for the strategic stuff while their existing team focused on tactical purchasing

 

But we’re in a post-pandemic world and most organizations I’ve spoken with don’t have the appetite to spend money in order to save money

 

They need cost savings now, not 6 months from now or a year from now…so they need the people who are already there to find a way to do more with less

 

And that could be a tough ask for procurement departments that were already understaffed and struggling to just keep up with the day to day stuff

 

Unfortunately, I don’t have a magic bullet to fix that problem. But I do have a suggestion, based on my experience and what’s worked for me over the years

 

I suggest taking a look at your procurement process to see where you can create some efficiencies

 

Because those efficiencies will give your team the extra time they need to focus more on cost savings activities

 

And you don’t need some big shot consultant, or even a little shot like myself, to review your process for you or point out the inefficiencies

 

You can do it yourself, and you could probably do it in one day. The harder part will be in convincing your people to give up some of the administrative tasks they spend time on every day

 

The reality is that, as much as procurement people complain about not having enough time to get everything done, they love their SharePoint folders and Excel spreadsheets

 

It’s mindless busywork but it gives the appearance of a really complicated, IQ-intensive task

 

Have you ever walked by someone in procurement who’s staring intensely at a massive spreadsheet and thought “man, I don’t wanna be that guy”

 

When I see that I think “man, there goes a couple of thousand dollars in salary down the drain”

 

If you’re a procurement person managing your work on a spreadsheet…you’re doing it wrong

 

And you’re wasting time that could be used to focus on more strategic, cost saving activities

 

If you don’t believe me, check out some of the testimonials on our website …or feel free to reach out to me directly for a chat

 

Mohammed

[email protected]

 

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Redesigning The Way Your Company Works

COVID-19 has changed the way we work, play, and interact with our world. Whether your company is a single or multiple branch office operation, with industrial facilities or mobile public and field workers — developing a clear, concise program requires careful consideration and detailed risk and resource assessments.

Unique challenges require unique customized solutions.

The COVID-19 pandemic has created unique challenges for businesses and workforces all across Canada. Public health departments, government leaders, and associations provide continual streams of information where business owners and executives must analyze this information to the best of their ability, providing direction in the creation of customized solutions for their business.

Barantas Inc. (Barantas) has remained focused on the core principles of prevention and safety services offering clarity and direction to company programs and operational procedure development.

Barantas can assist in any of the following key areas:

  • Business re-opening plans and implementation strategies
  • Operational redesign of workspace management
  • Worker inter-personal safety prevention programs and methodologies
  • Workforce programs for office, industrial, municipal and education sectors
  • Construction project-specific pandemic enhanced programs and inspections
  • Health and safety manual and policy development
  • Personal protective equipment supply and sourcing (masks, gloves, face shields)

Barantas provides comprehensive, long-term protection strategies and a personalized partnership anchored by our commitment to service excellence.

Redesigning Workplaces in a Post Pandemic Era

Our national reach and multi-disciplinary approach to safety management allow you to access a complete suite of health and safety services for a fraction of what it would cost you to source these services individually.

Barantas interactively works with you in evaluating and developing your new workplace strategies and worker health and safety management. Our goal is to collaboratively provide our expertise and knowledge to your key persons or teams, building a sustainable, internal infrastructure focused on the health and safety of your workforce.

We utilize a FIVE phase process. This process begins with a data acquisition phase, where we learn and understand your business, through to ensuring your teams can execute, monitor and continually adapt your program to meet today’s and future challenges.

Our process is based on the following principles:

  • Risk Reduction: Focused on reducing risk through prevention methodologies using the hierarchy of controls.
  • Individual Health and Safety Protection: Ensuring your company is taking the precautions reasonable for the protection of workers, employees, clients and affected individuals.
  • Maintenance of Applicable Requirements: Continual monitoring of authority directives, legislative requirements, and corporate due diligence best practices combined into a preparedness program able to adapt to changing environments and new directives.
  • Education and Sustainability: As part of working with your team through the five-phase process, our goal is to ensure understanding and application of the principles and methodologies for key team members ensuring an ability to assess, respond and adapt to continual change in both external factors and internal business decisions.

FOR MORE INFORMATION ON OUR 5 STEP PROCESS https://www.barantas.ca/the-five-phase-process/

For a full version PDF of this document https://www.barantas.ca/pandemicmanagement/

 

 

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Do Not Lose Focus

Let us not forget about all the other risks & threats that kept us up at night before the threat of the pandemic landed on our doorsteps.

Yes, the response to the pandemic is important.  Unfortunately, there are other risks & threats that still exist.  

Do not lose focus.

Organizations now more than ever need to be able to strike a balance with multiple focal points whist executing their emergency response, risk & security, business continuity plans.

Stay organized.  Stay Sharp.

We can Help.

Plan the Work.  Work the Plan.

Should your Municipality need assistance, contact Michael White Group today, and we will be happy to answer your questions or provide quotations.

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Municipalities and the Use of Technology During the Pandemic

If our current situation due to COVID-19 has had any positive impact, it is that municipalities who have been hesitant to adopt technology are now realizing just how vital it is. In the past, many municipal employees were unable to work from home due to technology limitations and concerns about the protection of confidential information. Let’s take a look at how some municipalities are adapting to the “new normal”.

 

WASAGA BEACH, ONTARIO

While other municipalities have set up a system allowing many staff to work from home instead of reporting to town offices, in the case of Wasaga Beach, the risk of an information breach has prevented them from allowing staff to work off-site.

“We had a cyber-attack almost three years ago that has made us wary of the security of confidential information being transmitted over the Internet from off-site locations,” said Communications Officer Michael Gennings.

“We have implemented many of the measures that other municipalities have, including work shifts to increase physical distancing. Should the pandemic situation change, the municipality will consider its options at that time.”

“Staff that must stay home are required to use vacation time or explore a leave. The bulk of our workforce remains onsite. Some have taken leaves.”

Wasaga Beach council is meeting via video conference for regular meetings, and in council chambers for closed session meetings.

 

MEDICINE HAT, ALBERTA

The City of Medicine Hat has laid off 170 workers – about 15% of its workforce – and has deferred filling many summer positions as it wrestles with closures and budget stress related to the COVID-19 pandemic.

City Hall is attempting to conduct as much business as possible, but with less physical interaction and higher safety standards. “The City of Medicine Hat has taken the approach that it’s business as usual during an unusual time,” said Dennis Egert, the city’s corporate services commissioner,  pointing to online, teleconferencing, or directing resident queries via email rather than in-person meetings. 

 

NOVA SCOTIA

Despite the roadblocks presented by COVID-19, Nova Scotia’s municipal elections will go forward as scheduled. Electors from all 49 provincial municipalities will go to the polls on October 17 in accordance with the Municipal Elections Act stipulation that elections be held every four years on the third Saturday in October.

Chuck Porter, Minister of the province’s municipal affairs department, told reporters “At this point, we see no reason why municipal elections can’t move forward. We’re all adapting to do business differently these days and certainly we will work with (municipalities) to offer support where we can.

“We’ve done things in the past like electronic voting, by-phone voting in some circumstances. So I think there are a number of options that are out there for us to be able to vote this coming fall.”

How is your municipality dealing with social distancing, council meetings, and more? We would love to hear from you! Drop us a line and let us know how you are doing … [email protected]

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Older adults could be our ticket to prosperity after the pandemic

It has certainly been a challenging period in all our lives both personally and professionally.

This is one reason why I wrote this article which highlights how the pandemic has unfortunately reinforced ageist bias on one hand, and yet has been able to take advantage of the skill, expertise and experience of older medical professionals on the other.

As businesses emerge from the lock down, they may benefit enormously from a cohort of older adults who still want to contribute by working. I see this as a win-win for all. If you can circulate the article to friends and/or on social media, or if you know of any companies, businesses, organizations who might benefit from Top Sixty’s expertise as they resurface, I would greatly appreciate hearing from them.

Thanks for your help as we fight one of the last socially acceptable “isms”.

Warm regards,

Helen

See Helen’s Profile

 

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Pandemic/Epidemic Business toolKIT

We are deeply focused on keeping your employees, customers, and suppliers safe while working, visiting, or conducting business at your facilities and supporting your business operations.

The Michael White Group International and Hilt International Security have partnered together in order to create a dynamic resource that is continuously growing, developing, and being  revised to keep you informed of the latest requirements, new best practices, and procedures.

As we all continue to navigate our  ‘new normal’, we have tapped into our global resources to develop a toolKIT that lays out processes to raise awareness of new health and well-being protocols and potentially helpful practices for cross-functional teamwork, operating discipline, and training for employees.

While it is not a one-size-fits-all approach, the Pandemic/Epidemic Business toolKIT includes practical recommendations, based on guidelines from Health Canada and World Health Organization, that could be tailored for different  businesses (when required) to address various scenarios they may face when returning to work. Regular updates will be made to the toolKIT based on real-time feedback. The toolkit covers a wide range of topics, including:

•      Step-by-step guides for setting up a pandemic response team

•      Cleaning and disinfection procedures

•      Staggering shifts and lunch breaks and other physical distancing strategies

•      On-site health screening

•      Protocols for isolating employees who become ill at work

•      & more.

This has been a difficult time for everyone, and re-establishing a workplace where employees feel comfortable performing their jobs safely is a multi-faceted challenge. It is our hope that by developing and providing this resource we can help your organization accomplish and adapt to the new operating protocols in today’s still ever challenging conditions.

Should your Municipality be open to exploring the need, whilst accessing our  toolKIT to assist you during  the re-opening, and re-populating of your facilities, contact Michael White Group International today, and in partnership with Hilt International Security we will be happy to assist.

 

 

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The WE Approach to Online Meetings

Well I hope everyone is staying safe and healthy during this crazy unprecedented time.  As I prepare to go on yet another online meeting I was thinking about the previous normal and how meetings were often named as a #1 waste of time in the workday.  People can drift and disengage with meeting fatigue.  Good gracious, how are we going to keep focus online?

Firstly, lets all commit to show up on camera. It gives us a fighting chance. Next, apply the basics of an effective meeting:

  1. Make sure the meeting is necessary
  2. Clarity of purpose
  3. Have an agenda and publish it beforehand.
  4. Be clear why each participant is attending.
  5. Always remember the simple, common courtesies of life, particularly if you need to win support and build relationships. Make people feel welcome by creating a comfortable environment now more than ever!
  6. Promote openness and honesty in your meetings.  Create the psychological safety necessary for this and the quality of the conversation will be much greater.
  7. Ensure you keep time. People need to feel their time is valued.
  8. Contribution is important. Ensure all participants have opportunities to participate, especially those whose preference is to reflect and consider the views of others before speaking. They often have very valuable insights that should not be missed.
  9. Carry out regular and frequent summaries. This will enable everyone to check understanding and confirm what has been discussed/agreed. Research suggests that in effective meetings someone summarizes at least every 5 minutes.
  10. Record – In our current reality most online platforms can do so and then you can decide on options for providing access to the recording. Or old school it and have someone take notes and send that to all who participated.

Strive for continuous improvement. Obtaining feedback from participants on what was useful about the meeting and what could have been done differently is valuable information.  We can flatten our on-line meeting learning curves by actively listening and implementing improvements.

Remember that teams are cognitively and behaviorally diverse and if we follow the basics, we will help everyone engage in a meaningful online meeting experience! 

Now let’s effectively Zoom ourselves through this 😊!

Gail Green, President and CEO

Emergenetics Ontario

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Even the Best Technology Needs Good Process

We know that technology is the backbone of any successful organization and, as a company grows, it must constantly add and change the internal tools that will enable it to stay competitive and profitable.

 

This applies as much to Procurement as to any other department within an organization.

 

But new technology on its own can’t overcome gaps in a broken or non-existent Procurement process.

 

In fact, some Procurement groups will actually create redundant steps when forced to incorporate new technology solutions into an overly complicated, inefficient procurement process

 

Case Study: Procurement Process Redundancy

 

Many years ago I worked for an organization that was using:

 

        i.         A home grown Purchase Requisition system to create and track internal requests for goods and services

       ii.         An add-on document management module from the corporate Print solution for Contract Management

     iii.         An add-on module from the corporate ERP system for Purchase Orders; and

      iv.         An add-on module from the corporate help desk ticketing system for Asset Management.

 

Since none of these disparate systems were integrated, the Procurement team had created a series of processes to manually input information into each of the systems for every purchase.

 

The overall process was incredibly redundant and full of vulnerabilities.

 

Purchasing agents would print out fully approved Purchase Requisitions and manually input the information in the ERP systems to generate Purchase Orders.

 

Contracts would go through several redundant approvals before final approval and signature, only to be stored in a standalone document repository with limited search capabilities.

 

Assets were received and tracked in a separate Asset Management system that required manual receipt of products and a 3-step invoice approval process.

 

Having failed several audits, the organization purchased very expensive Purchasing Requisitioning and Contract Management add-on modules from their ERP supplier, who assured them that their solution would provide an airtight Procure-to-Pay solution for the company.

 

What the supplier failed to highlight, and the organization failed to address, was cost and effort to redevelop processes, retrain employees and re-input years of historical data across 4 different legacy platforms.

 

So several years, and millions of dollars later, the add-on modules are collecting dust and the organization continues to limp along with even more redundant process bandages to stop the bleeding.

 

There have been exponential advances in Procurement technology over the past 20 years. And in the hands of skilled Procurement professionals the results have been amazing.

 

But Procurement tools are very closely integrated with Procurement processes.

 

Before investing in new technology an organization should evaluate the processes that are in place and then determine what, if any, new technology can be easily integrated into organization without creating redundancies or complexities that will increase costs.

 

Is the Procurement technology in your company an asset or a crutch? How has Procurement process, or a lack of it, affected your organization?

 

Please download our free report on Procurement Process Innovation here -> http://oneviewnow.com/report and see if there are potential cost savings opportunities hiding in your Procurement process

 

by: OneView

 

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