ProcureCon TV screens exclusive interviews with Europe’s leading procurement professionals. They go behind the scenes at major industry events to bring the very latest news, views and insight from the procurement sector.
Rick Hughes worked as the Chief Procurement Officer at Proctor & Gamble for over 30 years. He discusses the skills procurement officers need in order to lead their organizations through periods of change and what procurement is being assessed on today. Check out this informative interview below.
Business contract cycle is a period of time in which the economic activity of the business is discussed among the parties in action and then they come with up with a fixed contract; the contract may be indefinite or applicable to a limited number of years. Unless there is a provision built into the contract, it cannot be broken without the agreement of both parties involved. There are a number of steps typically involved in the business contract cycle. Here is a brief summary of the contract cycle.
Negotiation: The process of a business contract cycle starts with negotiating of the terms. It often includes prices of the goods or services which might be offered to the potential clients. The vendor wants to maximize profit and the recipient wants to maximize the savings. Negotiation allows both parties to arrive at a point where both feel like it is a good value. A win-win. If only one side wins then the contract will likely fail at this point.
Authoring: After the negotiation the contract cycle moves to authoring. Authoring is a critical part of the contract process as this is where the terms agreed to in negotiation are outlined in writing. Product and/or services are clearly defined so all parties know what is to be expected for the prices given. Accuracy is of utmost importance so there is no room for misunderstandings as the contract is carried out. All the records can be maintained in contract management software, to avoid any confusion.
Approval: Once everything is detailed in writing as a representation of what has taken place in discussion, wether verbal, email, fax, text or any other form of communication the contract needs approval. The represntatives with the proper authority from both parties will need to review the written contract to ensure accuracy so that nothing is overlooked. Both will give their approval typically by written signature.
Amendments: Amendment is done in any contract when something needs to be changed. One or both parties may see a need to modify the contract terms. It could involve the price, the time of delivery or any other aspect of the contract. The initiating party will need the approval of the other member to the contract and the amendment is put in writing and signed off by both. At this point it becomes a part of the contract that will add to or supersede the existing contract.
Execution: Execution is following and playout out the terms of the contract and any ammendments so both parties perform what they agreed to do.
If you want to excel at all the steps of the business contract cycle, then contract management software can be an integral part of helping you succeed. Contract management software will help walk you through all the processes of the cycle step by step with ease virtually eliminating any kind of error. Highly accurate and more efficient contract processes will help your business excel.
If you have a small business or you’re a first-time entrepreneur, then you might face a problem related to issues of scalability of technology software in general, but specifically purchasing software. SMBs face a variety of challenges involving start up costs and getting the software they need for today that fits today’s budget while allowing room for growth as the company expands sales and operations. With a limited and finite budget you cannot simply buy the biggest and best of everything. That’s why it is important to utilize wise spending for purchasing software. Software that will both meet your needs, be affordable, but have a high quality and offer upgrades and scalability as you grow.
Let us go through the five rules of wise spending for purchasing software:
1. Be forward thinking
Consider the long-term performance. Rather than buying more than what you need some may make the error of buying only what they need today and then 6 months or a year later have to reinvest by buying a completely new system that can handle the growth. Look at your business projections and timelines and see if you can find a company and product that will grow with you. One that will give you what you need today at a price that fits your budget, but provides for add-ons and additional services without having to invest in a new system is wise spending.
2. What is the bottom line final cost?
A low-priced product that fits your immediate need can actually cost more over time. The total cost to consider is not only the initial price tag, but all the additional costs such as IT, programming, staff, training, modification and everything you may need to do to get this product in workable condition as it interfaces with your other systems. You may also try to put band-aids on through additional modifications over time to try and keep the system going longer. Bottom line is you may be better off going a step up with a slightly higher initial cost for the purchasing software that will work better for you over a given time frame.
3. Should you trust your first impression?
When we consider buying purchasing software it may be tempting to go with your first impression. The trouble with that is some software is designed to impress and wow the potential client on the front end, but once you get into the actual software and its use, you may find that it is severely lacking. First impressions are good, but you should not necessarily trust that as a basis for making a decision on purchasing software. Consider more than the first impression and dig a little deeper so you can make a wise decision.
4. Keep training and tech-support in mind:
As an SMB or new business you may not have a huge staff with a variety of talent to pull from. Many SMBs lack the proper knowledge for purchasing software; as they tend to laser focused on their product or service and making it the best it can possibly be. That’s why they are in business because they are experts in that industry. That being said there are experts in purchasing software so be sure the company you choose to do business with offers the training and tech-support you’ll need to make the most of their software.
5. Check the company’s financial stability:
A wise spender will also consider the financial stability of the company. If you follow all of the above steps and invest in purchasing software that can grow with you over the years you want to know the company you are buying from will be with you in the years ahead. A young company with lots of hype may stand the test of time, but it may be better to consider a company who has been around for decades so you can have that peace of mind that going forward they will be there decades more, walking side by side with you and your business as you grow.
Tuesday we looked at the first 5 things to consider and today we will finish out the list.
6. Is the Software Scalable?
We all know the rapid rate of change for software. You buy a laptop with the best specs and a year or two later and it has no room left on the harddrive, it is too slow, the latest software is too large or your laptop is not powerful enough to make full use of its capabilities. How well will your procurement software handle changing needs of your business? Can you customize and change the software as your business grows over the next couple of years? You want software that can grow with your needs, not software where you jump through hoops, extensive training, connectivity to your other systems, only to need replaced a year or two down the road because you’ve outgrown it.
7. Is the Software Customizable?
It is rare that software meets your exact needs right out of the box. Some amount of customization is to be expected. Can the software be customized or will you have to make due or use workarounds to get it to accomplish what you need for your business. Is this something you’ll have to accomplish on your own or does the software provider offer customization as part of the setup. If so, is that included in the cost or is customization an extra charge? As a general rule of thumb, customization should be more that one-third of what you have spent for buying procurement software. So before buying the software considers the factors of partnering with softer developers, outsourcing, and in-house development to achieve the level of customization you need.
8. What Installation Challenges can be Expected?
No matter how advanced the software and experienced the provider, there are likely to be some challenges or obstacles faced during the installation. Having done a number of installations, the company should also be able to warn you of potential challenges. But don’t let this be a cause for concern. This should be considered a good thing. Companies that track these challenges can research to find better ways to overcome and bypass these challenges in the future.
9. What Support is Available?
Whether you buy from a company in town or on the other side of the world has an impact on the type of support available, but it shouldn’t affect the ability of the company to provide the support you need. Be aware of the support that is offered, whether it is in person, on-site, phone, or email. Basically you want to know what to do when problems arise. Can you get someone on the phone immediately or will you need to submit a trouble ticket and wait for a response? What is the typical response time? Is after-hours support available?
10. What Features have been Requested?
Ask if they have a list of features requested from other clients. If they do that will give you some idea of areas of use that may be missing once you get into it. It can help you plan your business, but also give you an idea of what may be coming as well.
Part 1: Here in this article we will look at the first five things to consider when it comes to buying procurement software. Some are more obvious, but others may bring up some valid points to consider in your search.
1. Pricing of software:
How is the software priced? Is it a flat rate? Is it based on functionality or number of users? Drilling down further is it based on not simply a raw number of users, but how many concurrent users will be accessing the software in the course of a day? Do you have a large up front cost or do you pay smaller monthly fees? The same company may offer multiple pricing options. Your needs and level of use may determine which pricing model works best for you.
2. Services available with it:
Before even buying the procurement software, make sure to ask all about the on-site services that they will be providing. Does the price include set up and training? Customization? See what is included in the base price and what services may required an additional expense.
3. Guarantee of Satisfaction:
In today’s world you can take back just about anything and get a refund. But software works differently and you will want to ask specifically what type of satisfaction guarantee is in place for the software purchase. Is a refund possible if you are unsatisfied? You will need to decide how important this is before proceeding.
4. Trouble-shooting Response Time:
Let’s be honest; no software is perfect. Glitches and bugs are guaranteed. What the company does when you have a problem is what is important. Do they respond quickly to help you trouble shoot problems? If a bug is discovered do they begin working on the repair or does it get added to the next quarterly update? Understanding how this works will help ensure that your expectations are met and avoid frustrations when problems do occur.
5. Procurement Software Updates:
Ask about planned updates to the software. When updates do occur how are existing customers notified? This also ties back into pricing to some degree. Are updated included in the pricing package or will you have to pay to receive updates? When purchasing software as a service your monthly subscription should include all software updates as that is one of the advantages to purchasing in this format. Or is it somewhere in the middle where you receive updates for a specified time after which you would need to pay. This could be a good area for negotiation; make sure your contract includes free updates for as long as possible.
Technology surrounds us and is involved in every part of our lives. From the simple alarm clock that starts your day, to the complex software used in business, smartphones, tablets and everything in between. As we look forward to bigger and better advancements in 2015, let’s pause for a moment and look back to how it all started and see some of the major software events you may have forgotten about.
As a purchasing professional what do you want to see take place in your career in 2015? It is natural to want more income, more prestige, more responsibility, a better title. Are those things you are hoping to see as you advance your procurement career? But it takes more than hope to advance your career; to make it happen you need to have motivation, drive, determination, and follow through. It is OK to have a healthy dissatisfaction of your current job or position as long as you harness that into positive movement toward advancing your career. The dangerous position is when you become satisfied and no longer want more so your behavior slacks off. Ride that wave of dissatisfaction to more action.
At the same time don’t let that healthy dissatisfaction turn into unhealthy behavior. Dwelling on the parts you do not like can lead to complaining. Don’t forget that you do have a enjoyable job, respect from the company and customers and regular salary, which many don’t have. If you get trapped in a cycle of complaining no matter what advancements you achieve you will never be happy, always finding something else about which to complain. You have to find that balance between enjoying what you do while having that little itch just under the skin that makes you want to strive to do and be more.
If you want to advance your procurement job, then you need to be constantly learning; if you think you know all there is to know about your job then you are done. If you think because you graduated with a degree you know all there is to know then you are done. But if you remain open and challenge yourself to learn more you will find doors opening. There are thousands of blog articles, industry publications, continuing education classes, seminars and the list goes on. That healthy dissatisfaction that results in a hunger to always see what else can be learned will go a long way toward helping you advance your procurement career.
Find something that appeals to you and get started. If you don’t think you have the motivation necessary then start by reading articles related to how to motivate yourself. Try to do something every single day because even small actions will add up to helping you achieve the best professional life. Consider advanced degrees, but in between there are articles and blogs where you can read something every day and get just some nugget of information that will spark an idea. Read, study, learn.