Archive for the ‘Contract Management’ Category

Should retailers manage their in place contracts with SaaS based Contract Management Offerings?

Monday, May 1st, 2017

 

Todays post is from Ron Southard, CEO at SafeSourcing.

It is not secret that the majority of global retailers both large and small do not have contract management solutions in place. Nor, do they have document management systems in place. In order to mitigate their risk, where should focus be placed when beginning implementation?

SafeContract™ which is a Software as a Service cloud based offering is the best way to store and leverage the pertinent language or data within existing contracts. What this means is that there is also a need to create a process with which to identify the Metadata within your contracts.

According to Wikipedia Metadata is loosely defined as data about data. Though this definition is easy to remember, it is not very precise. The strength of this definition is in recognizing that metadata is data. As such, metadata can be stored and managed in a database.

When we think about contract management, we need to be thinking about mitigating risk and not necessarily all of the language embedded in a contract. On many occasions this information is listed on addendums or attachments. For sake of simplicity, and this is certainly not an exhaustive list the following twenty items reflect the metadata you might want to hi-lite and set alert targets against in storage of current contracts.

1. Supplier or Seller Information
2. Purchaser or Buyer Information
3. Detail of Goods to be purchased
4. Detail of Services to be purchased
5. Delivery Timeline Details of the Goods and or Services
6. Agreed upon pricing
7. When and where should payments are to be made?
8. Payment Terms
9. Down Payment Terms
10. Delivery Dates
11. Delivery Location or locations
12. Risk of Loss or Damage and transfer language
13. Is Assignment of this Agreement Allowed?
14. Detailed Warranty
15. Trademark infringement language
16. Origination Dates
17. Termination Dates
18. Termination Notice
19. Additional Clauses
20. Signature Details
21. Auto Renewal Language

The above list should be at a minimum the type of data that is considered for your Metadata table for inclusion during the document review process that your SafeSourcing will put in place for you as a supporting service during the early stages of implementation, training and review of your SafeContract™ SaaS cloud based offering.

To learn more please contact a SafeSourcing customerr services representative.

We look forward to and appreciate your comments.

Update…Do Not Procrastinate!

Wednesday, November 23rd, 2016

 

Today’s post is by Heather A. Powell, Director of Customer Services & Project Manager at SafeSourcing.

Dear Buyer,

This is your 30-day notice that your annual contract is coming up, let’s discuss how we can extend your current contract…

Sincerely,

The Seller

STOP! Do not call the seller! Research, research, research your options! I wrote this blog almost five years ago, and the truth is nothing has changed when it comes to doing your homework and researching what you are purchasing and what is within your contract.

Worse than getting the above notice is the evergreen clause. An evergreen clause is a statement within a contract, that says something to the effect of “this agreement shall automatically renew for another one (1) year term, unless either party provides notice to the other of its intent to terminate this agreement not less than thirty (30) days before the end of the then current term.”

Do not procrastinate to the point you are struggling whether to stick with your current supplier (evergreen a poor contract/poor service) or search for a new supplier. Give yourself time to research your alternatives. If you know a contract is going to expire within 60 or 90 days, start your research NOW! There is no harm in learning as much to know as possible about your product and your company’s annual needs for that product.

Maybe your current supplier does have the best price in town, maybe not…. If you could save 5, 10, 15, even 20% or more on your current product why would you stick with your current supplier, and why not explore your options with a new supplier who can give you better savings, maybe better service, with a better product? Are you lost and not sure which way to look? Are you unsure of where to start or who to talk too? You don’t have enough time to start the process or do the research you know needs to be done? Let SafeSourcing be your guide and source to getting you the answers you need, even if you did procrastinate and have 30 days left. We can do all of this for you and your company from research of the product, to research of the suppliers, to follow through of hosting an RFQ to get your company the best possible savings and value of your product.

Don’t become the King or Queen of Procrastination! For more information about how we can assist with sourcing your needs for your company, please contact a SafeSourcing Customer Service Representative

Contract Types

Tuesday, November 22nd, 2016

 

Today’s post is by Mike Figueroa, Manager of Customer Services at SafeSourcing

If you don’t like the pricing model of the contract you’re working within but didn’t know you had other options, here is a high-level overview of a few of the standard contract types being used today:

Cost Plus: An agreement wherein the seller agrees to charge based on cost of goods sold, plus whatever profit margin is required to make the project viable. One example is where a highly commoditized good is subject to price regulation or index pricing, and therefore will have their pricing fluctuate based on the market constraints. The only pricing the vendor has control over in this scenario, is their profit margin, which will be the only pricing variable the vendor can agree to discount during negotiations.

Guaranteed Maximum Price: Similar to a Cost Plus contract, a GMP agreement is where the contractor is reimbursed for their actual cost, but also is paid an agreed upon fee. This fee is not to be exceeded unless the scope of the project changes, for which a formal “change order” can be enacted.

Incentive Contracts: This agreement begins as a cost reimbursement model, but varies based on whether or not previously determined goals were met. The incentives can be positive or negative, such that a vendor can be rewarded for underrunning the estimated cost of the project, or penalized for being over-budget. Both scenarios still require timely delivery of finished project. One potential drawback though, is that it can be difficult to monitor quality of work/product meets standards, as this model can also incentivize vendors to cut corners.

Time and Material: This contract type is fairly self-explanatory, in that the basis for pricing is on the number of man-hours used, and any necessary materials to complete the work contracted. Profit is either baked into the hourly rate, or invoiced as an add-on. This contract type is most typically used in situations where it is difficult to forecast the number of hours needed to complete, and must be billed as needed.

Unit Price: In this contract type, the activity or good is grouped into a pre-defined unit. The vendor is then paid a fixed amount for each unit completed. Profit and overhead is typically included in the unit rate, and rate is determined in part by estimated total units contracted.

Lump Sum: A Lump Sum contract is typically enacted when a full scope of work is well defined, enabling the vendor to quote the exact amount required to complete the project. This contract type can be financially risky to a vendor who could later discover hidden costs to perform the project, and can be risky to the timeline of the principle, as the contract would not penalize or reward timeliness as would an Incentive Contract.

For more information on how SafeSourcing can assist your team with this process or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative. We have an entire customer services team waiting to assist you today.

More than negotiating contracts!

Thursday, August 11th, 2016

 

Today’s post is  from  our SafeSourcing archives.

If you are a sports enthusiast there is no doubt that you are probably familiar with the Buffalo Wild Wings chain of restaurants.  The fact that this statement is geared to sports fans and not food or Buffalo wings fans is the biggest reason this company is one of the fastest growing in the world.  By shifting the focus away from what they had traditionally done (food first; atmosphere second) to a primary sports fan destination that happens to offer good food, the chain has been able to explode with growth almost tripling revenue numbers in the last five years.  This effort to give customers more than the traditional offering and some of the ways procurement professionals can begin doing the same for their internal customers is the focus of today’s blog.

Get involved early – Negotiating contracts and handling vendor negotiations has always been a main focus of procurement teams.  Many times they are engaged well after the decision has been made for services and products.   The problem with this approach is that there is no longer any leverage for the procurement team to get a better deal for the company and often they are not equipped with the background details and project progress that allow them to execute the most beneficial contracts.  By getting engaged through annual or bi-annual meetings with the department heads, a procurement team can make themselves better prepared to help the department and the company get the most value from a new agreement once the decision has been made.

Provide Extra Information – With the assumption that they have been engaged early, procurement teams can offer their internal customers more than the traditional approach by helping departments better understand how they are spending money with their current incumbents.  Helping to track down the details of how well a contract has been executed, whether through internal means or directly from the incumbent suppliers, can provide very important details for departments in making decisions of who they do business with in the future.  Another way procurement teams can assist their internal customers is by helping them to understand how the company uses and feels about the products and services they have selected in the form of supplier scorecards.  These can be used as leverage for future contracts even if a supplier change is not made.

Offer New Tools – In some companies procurement teams are actively using eProcurement tools in conjunction with strategic sourcing partners to accomplish some of their goals on many sourcing projects.  So many times these solutions and partners offer functionality that other parts of the company can use.  Contract management, survey tools, and online RFx tools are just a few of the tools that procurement departments can bring to their internal customers that will provide extra value and support beyond what they have traditionally done.

At SafeSourcing we know that many procurement departments are looking for ways to be more involved with the purchasing projects that go on in the rest of the company. At SafeSourcing we want to work with your team to help provide extra value to your internal customers paving the way for involvement at a new level.   For more information on how we can help with this process or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.

We look forward to your comments.

What does a procurement department do?

Friday, June 24th, 2016

 

 

Today post was written by Ryan Melowic, Vice President of Customer Services at SafeSourcing.

According to Wikipedia, Procurement is the act of acquiring, buying goods, services or works from an external source. It is favorable that the goods, services or works are appropriate and that they are procured at the best possible cost to meet the needs of the acquirer in terms of quality and quantity, time, and location.

wiseGeek defines a procurement department as being responsible for managing the purchasing activity for the organization. There are two types of purchasing or procurement departments: centralized and decentralized. In a centralized model, all requests for materials or goods are center to this department. In a decentralized model, individual departments can process their own purchases.

SafeSourcing is an e-procurement company offering a complete procure-to-pay suite of applications under the SafeSourceIt™ banner which reduces costs, improves efficiency and extends the reach of your current procurement organization. The heart of our family of products is our eSourcing tools which includes our popular reverse auction technology. Our historic ROI is greater than 10x and in many cases companies receive an ROI on their subsequent roll-out during the pilot stage.

For more information on how we can help you with your procurement needs or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative. We have an entire customer services team waiting to assist you today.

We look forward to your comments.

 

 

Safety in Contracts

Thursday, May 19th, 2016

 

Today’s post is by Dave Wenig, Regional Sales Manager at SafeSourcing.  In this blog, Dave discusses safety in contracts.

We’ve all heard that there is safety in numbers. It’s generally understood that in a larger group, each individual has a lower chance of something bad happening. Fish do it… humans too.

The point is that safety is a general concern. While we all take precautions to ensure personal safety, often the same level of attention is not paid to the safety of our contracts. Of course, there are contract management solutions available to provide safety relative to your contracts.

As I see it, contract safety is knowing when contracts are set to expire and proactively taking steps to prevent unfavorable auto-renewals. Contract Safety is knowing that the price you negotiated is also the price you pay throughout the contract term. Contract safety is always having your contracts at hand in the event that you need to review them.

Without these elements, you don’t have contract safety. If you don’t know where the contract is or you can’t verify the terms including pricing, or you don’t know when the contract ends, then you do not have contract safety.

Again, there is reasonably sound logic behind the theory that there is safety in numbers. I encourage you to take the same logical approach the safety of your contracts.

Dave Wenig is a Regional Sales Manager at SafeSourcing and is a devoted champion of saving money. Dave or any member of the experienced team at SafeSourcing would be happy to discuss how SafeContract™ can provide you with contract safety. For more information, please contact a SafeSourcing representative.

We look forward to your comments.

 

 

Can You See Your Desk?

Friday, January 15th, 2016

 

Today’s blog is by Margaret Stewart, Executive Assistant at SafeSourcing.

Whether it is business or personal, it is important to keep essential files. As the tax season approaches, we are reminded that we must keep tax returns for several years. Just like taxes, there are other important documents each of us must keep, such as many financial statements, contracts, warranty paperwork, or even photographs. The problem is that many of us keep adding to the list of documents to keep, while the amount of items we can shred or recycle doesn’t go down as much. So, what options are available?

Traditionally, everything has been in paper form. Stacks of paperwork can be hard to sift through and even harder to organize. If a document is needed, it can take a grueling amount of time to obtain. Even if we can efficiently organize all the paperwork we need, it still takes up larger and larger amounts of space, likely creeping in to our work areas. Not only does all the extra paperwork hinder our efficiency and is aesthetically unwanted, but it can also be a fire hazard.

Luckily today, we are able to store most items electronically. Storing these on your own computer, however, can really slow down your computer. SafeSourcing can help your business or organization with this problem. The cloud-based storage programs, SafeDocument™ and SafeContract™, allow you to free up space on your device and securely store your important papers and contracts electronically. With these programs, you can access your items anytime anywhere and is exceptionally easy to use and easy to find what you need.

For more information on SafeSourcing’s cloud-based storage, or on our Risk Free trial program, please contact a SafeSourcing Customer Service representative. We have an entire team ready to assist you today.

 

Where is that Contract?!?

Monday, January 11th, 2016

 

Today’s post is written by Heather Powell, Director of the Customer Focus Team & Project Manager at SafeSourcing Inc.

Recently, I was working with a client on creating a Request for Information for a project and was requested to include a particular supplier. When I inquired why they were to be included, the answer was because we have always done business with them. Ok.  When I asked for the latest copy of their contract, I was met with silence and then an unsure answer of IF there was a contract and WHERE the contact is.

pileoffolders

 

 

 

 

 

 

 

Within a few days I was sent a correspondence with an attachment.  The e-mail apologized for the delay in responding to my request and that the contract took days to find as it was in the computer of a past employee. Once it was found, the contract had expired in 2002!

All because they have “always done business with them” mentality:

  •  The contract became outdated.
  •  It was stored in one computer that no one had access – the employee no longer worked for the company and IT had to retrieve it from the hard drive.
  •  The supplier was charging them prices that had doubled and tripled over time.

Ask yourself and ask those you hold responsible:

  •  Where are my contracts?
  •  Are they current?
  •  How do I know when the contract is set to expire?
  •  Who has access to them?
  •  Are they electronic copies or paper copies?
  •  How do I avoid all of the issues above?

SafeSourcing has the solution for you!

SafeContract™ is a tool that companies can use to automate and improve their contract flow by electronically capturing their company’s contracts and contract details.

By implementing SafeContract™, companies can improve their contract cycles, standardize processes, reduce administrative costs, improve contract compliance, and increase the effectiveness of negotiations.

SafeContract™ provides financial, role, and organization security, as well as supporting regulatory compliance. It makes contract creation, contract activation, and contract compliance safe and easy to access and use.

SafeSourcing can assist you in exploring your contract management procedures for your business or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative.  We have an entire customer services team waiting to assist you today.

We look forward to your comments.

Are you monitoring your Contract Leakage? Can You?

Monday, October 12th, 2015

 

Todays post is by Ron Southard, CEO at SafeSourcing Inc.

The answer is probably not or you would not have any and 80% of all companies not only have contract leakage, but because of it they often do not realize the hard earned savings the negotiated with their new e-procurement tools.

However congratulations are in order, you have used your new e-procurement tools effectively and awarded the business to a new supplier. You may have also offer a Letter of Intent or LOI to get things moving while the contract is being completed. With that assumption in place, how does your organization ensure that the award of business is implemented or delivered as awarded so that you indeed receive all of your savings?

This is probably the most difficult part of the entire procurement lifecycle. The first step is to understand your data and where it is kept, that includes understanding what constitutes contract leakage so that you know what you are looking for. This data needs to be looked at on a regular basis in order to insure leakage is not occurring. This should be at least monthly depending on specific contract language (Meta data). Most contract management systems have alerts that can be triggered as frequently as required against this data.

The following list although not all inclusive speaks too many of areas in which contract leakage can occur. This happens in all companies large and small. If you are aware of them, capture them and report on them regularly there is a good possibility of controlling them.

1.  Award Date
2.  LOI Date
3.  Contract Date
4.  Delivery Dates
5.  Quality specifications variances
6.  Making payments at a prices different from the contract
7.  SOW creep
8.  Rebate misses
9.  Escalator Misses
10.  Invoice discrepancies
11.  Missed volume discounts
12.  Insurance discrepancies
13.  Shipping discrepancies
14.  Expiration dates
15.  Expiration Notification Dates
16.  Auto Renewals & Evergreening

Don’t work hard to drive benefits from your procurement organization and then lose much of what you have gained to contract leakage. If you’d like to learn more about SaaS based Contract Management offerings, contact your SafeSourcing customer services representative and ask how they can help.

We look forward to and appreciate your comments.

How Much Does FREE Cost? Simple Question right?

Tuesday, September 1st, 2015

 

Today’s post is from the SafeSourcing Archive

The byline to this post would seem simple but the number of large companies that are taken in by it is staggering.

My brother dropped his phone and to no surprise the screen was cracked. He took it into his wireless provider and without insurance he would have to buy a new phone. A new phone? That sounds great! Right? Well he did not have an upgrade available and without insurance he would have to buy the phone at “full retail price”.

The phone that cost him ZERO dollars when he signed a two-year contract was $349.99! I understand that the contract gets you a better deal, but how do wireless providers make a profit when they are just “giving away” phones.

Wireless providers subsidize the cost of your phone into your wireless plan. They have to pay the manufacturer for these phones, but take such a large hit initially in the contract. It takes wireless providers an average of at least six months to begin making a profit on your wireless contract. Makes you wonder how low your service contract could be a month if you paid “full retail” price for your phone.

Many companies have used the word ‘FREE’ to sell a product or service, but are they really free? If you did not accept the free or significantly low cost coffee maker for the office would the year supply of coffee be cheaper? There is a cost for free and that cost usually falls back on the customer or consumer.

SafeSourcing, Inc. has the knowledge and expertise to eliminate the cost of ‘free’ from your service related plans.  If you’d like more information on how avoid the free pitfall, please contact a SafeSourcing customer services representative.

Be careful out there or you might just get what you have not asked for.

We look forward to hearing from you.