The 3 Procurement Contract Deadly Sins – Part 3
Have you read the first two parts of this series (if you didn’t, stop now and go read it – these issues are highly interrelated)
We are now down to the 3rd Procurement Contract Deadly Sin.
And it’s the deadliest of them all.
It’s also the most commonplace. Everyone is committing this sin, and everyone is suffering from it. Worse yet, nobody is talking about it.
This deadly sin makes you spend 70-90% of every day in unproductive fire fighting activities. In unplanned activities. In activities that become the highest priority, but don’t contribute anything to your career, income, or job results.
The final Procurement Contract Deadly Sin is this: writing of contracts for goods and services, instead of for *PERFORMANCE RESULTS*.
Let’s follow this painful flow:
The end user asks for goods and services.
You solicit or tender for goods and services.
You negotiate for goods and services.
You contract for goods and services.
You receive goods and services.
Your end user complains, not about goods and services, but about PERFORMANCE RESULTS.
Since the contract was written for goods and services, you have no recourse and no remedies.
You now have to spend your time fire fighting solutions because your end user is unhappy, your suppliers are confused, and the contract you wrote is useless to help resolve.
Sound familiar? What would you say if I told you the Fortune 100 is absolutely struggling with this? How about if I said the Fortune 500? The Fortune 1,000? Keep going.
The procurement profession is struggling with this issue, from top to bottom, in every industry, in every country, at every level.
Is that bad enough for you?
And what is being done about it? Answer: absolutely nothing. The contract templates are for goods and services and the lawyers don’t have it as a part of their scope to address this.
The net result is frustrated end users, frustrated suppliers, and exasperated procurement professionals that are full time fire fighters, against their will.
The answer is to rearchitect the entire procurement process so that end user demand is articulated in the form of performance results, performance results are solicited and negotiated for, and performance results are contracted for.
And guess what happens next? You guessed right: Performance Results are received.
No more frustrated end users. No more frustrated suppliers. No more full time fire fighter roles for procurement. Much more free time on your schedule.
This is not just a theoretical panacea – we’ve taken over a hundred companies down this path and helped them transform. Not a single one has looked back. It’s the only way to go.
Now go off and do something wonderful.
Be your best!
- Omid G