Contract Strategy: Making Commercial Strategy a Reality

NEW This highly practical two-day in-house programme will enable you to develop the skills and knowledge needed for you to deliver the contract strategy that is right for your business.

Course overview

Contract strategy is the critical slice of strategy between commercial strategy and sourcing strategy. It takes the direction that the business has mandated it is going in and provides the direction, leadership, clarity and scope to make the commercial strategy a reality.

Too often we go to lawyers to have them write a contract before we know what we want the contract to achieve. It’s not their fault when the deal goes wrong, although we sometimes like to pretend it is. Failing to get what we want is usually the outcome of not knowing what we want.

Your next step is to call us now on +44 (0)20 7729 6677 or email us at info@falconbury.co.uk or use our contact form and find out how we can help. There are no commitments, and if we cannot help our advice and recommendations are free of charge.

Why you should attend

This highly practical two-day in-house programme will enable you to develop the skills and knowledge needed for you to deliver the contract strategy that is right for your business.

This programme can be tailored to your specific needs so you and your team achieve the goals you’re business is aiming for.

Sample programme

1. Strategy: what it is and what it isn’t

A strategy is a leadership document; providing guidance and direction to the team and the business as they set out to deliver a task.

  • The little black dress model
  • Essential structure
  • Pitfalls and traps

2. Business engagement: gates, governance and roles

Strategies need scope and boundaries, an owner and a decision making process that will agree to decisions and empower the team at key points to drive forward.

  • The governance model and the role of the strategy leader
  • Make up and function of the Strategy Steering Group
  • Key milestones and scheduling

3. Being a critical friend: providing a constructive challenge to the business

The role of the contract strategy is to put the business in the best position possible to get what it wants at the lowest sustainable cost and with the right risk profile. It means being able to think the unthinkable.

  • Value mapping / engineering
  • Frugal engineering
  • As good as we can or good enough?

4. Contract strategy model as key strategic questions

The contract strategy should invent the world we want to inhabit and deliver leadership.

  • Contract expenditure – a target cost for the expenditure
  • Contract specification – based on business needs
  • Ideal supplier – the supplier we want to deal with
  • Contracting method -performance and payment choices

5. Contract expenditure: how much should we pay?

Competition and supplier cost analysis are useful but they can only get us so far. We need to take ownership of the money and understand where the money goes.

  • Target costing
  • Price change and variation mechanisms
  • Sensitivity analysis

6. Contract specification: what do we want to achieve?

There is an old aphorism that you get what you pay for. It’s not true – you get what you specified. Making sure the specification links back to the business needs is crucial.

  • Using a supplier’s knowledge effectively
  • Input versus output specifications
  • Bundling and boundaries
  • Risk and flexibility

7. Ideal supplier

Nobody will be perfect – we’re just not that lucky. However, we can shape the supplier we end up working with.

  • Business needs analysis
  • Operational needs and critical performance characteristics
  • Technology path map (ours and theirs)
  • Tomorrow’s supplier profile

8. Contracting method and contract elements

We need to decide which method will get us our best supplier. We should make the strategic choice because it fits with what we want to achieve and it is right for the market.

  • Market strategy and payment mechanisms
  • Service level components and service level agreement
  • Performance and acceptance criteria
  • Duration and change management

9. Ready, fire, aim: Murphy’s Law and risk management

Murphy said, “what can go wrong will go wrong”. We need to assess the risks that we have built in and that have crept in.

  • Risk management approaches
  • Purchasing risk identification, evaluation and management
  • Quantifying risk transfer and getting it right
  • Dealing with risk – eliminate, reduce, insure, control
  • Contractual options for dealing with risk

10. Closing the loop on business engagement

Strategies can, and do, fall over because they were misunderstood.

  • Presenting your strategy
  • Building the strategic case
  • Getting buy-in
  • The Pyramid Principle

Recommended trainer

Robert Maguire runs his own consultancy and his experience spans the full range of outsourcing and vendor management issues from determining what to outsource, through developing an appropriate contract strategy and building a performance dashboard to negotiation and conflict resolution to deal with the inevitable management issues that arise in any long-term relationship. Through his consulting, coaching, mentoring and skills development interactions, he helps major organisations in the public, private and not-for-profit sector transform their thinking and approach to their commercial relationships. Robert’s clients span a range of industries including pharma, consumer products, telecoms, transport and public sector both in the UK, the US and the Middle East. He is an accomplished line manager and consultant experienced in all aspects of purchasing and supplier management. Prior to establishing his own consultancy Rob was European Purchasing Manager for Reckitt & Colman plc where he established a European procurement function for the purchase of raw materials and sub-contracted products. He has worked as a consultant at Price Waterhouse and Ernst & Young, and has worked with a number of pharma companies including Glaxo Welcome (GSK).