We are now down to the 3rd Procurement Contract Deadly Sin. And it’s the deadliest of them all. If you did not read the prior 2 deadly sins, these all feed upon each other. Here are links to the other 2:
This 3rd Procurement Contract Deadly Sin is 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, because you got exactly what you contracted for. It just wasn’t what the end user actually needed.
- 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. And somehow it’s all procurement’s fault.
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. And with all those employees no longer spending 70-90% of every day in wasted activities, productivity levels have gone through the roof. And they actually have time to work on strategy.
If you aren’t working on this transformation, then you are a slave to this profession. It needs to be your #1 focus as a procurement leader.
Now go off and do something wonderful.
Be your best!
Omid G.
“THE Godfather of Negotiation Planning” ~ Intel Corp
P.S. The CPSCM™ IS THE ONLY certification program on earth that does a deep dive on this contract transformation that we just covered. Omid G is your private instructor for 32 very dense and fast paced hours – see the materials and hear his voice throughout – online and on demand! Learn these skills to put your career and departmental results on the fast track for success. Contact my office at support@PurchasingAdvantage.com for a free demo for your department or to discuss in-house Procurement & Negotiation Capability Building efforts for your team.
