Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy

My Tips and Experiences on Managing Contracts by The Founder of Procurement Tactics 

The contracting phase is the final opportunity for you to achieve sustainable procurement results together with your suppliers. But just because the negotiation is ending does not mean that you will be complacent.

Managing contracts is often perceived as boring because it comes directly after the most exciting part of the procurement process which is the negotiation phase.

Now, it is time to put all your agreements and deals into paper. Since it is an integral part of the sustainable procurement process, the contracting phase should be done efficiently.

I am going to help you by telling you how I did this in my time as a procurement manager.

The first step after the deal is developing the contract. Once I was finished with planning and scoping the content of the contracts, I developed them. This is where details of the contracts are written and discussed further.

Next is the negotiation and signing of the contract. Once I finished developing and planning out their contracts, it was time for more negotiations about how to put the deal on paper and later, the signing of the contract.

Once again, I generally had to come together for one last negotiation for the details of the contract. If there are details that need to be ironed out, these were discussed thoroughly.

I want to share a personal example of how I speeded up the contract phase after I came to a deal with a supplier. When I came to a final agreement, I directly produced the first draft agreement via email. Not the hour after closing the deal, but directly after agreeing, with everybody in the room.

By doing this, I saved myself hours of discussion after closing the deal. Especially when dealing with large, 100 million-dollar suppliers, it often took me months to come from a face-to-face deal toward a signed contract.

After closing the deal, we went on to the next step which was negotiating what we agreed upon.

Save yourself time and effort in moments you have the opportunity to wrap up the made deal directly when all negotiating people are still in the same room. I did this by sharing my screen on a monitor while writing my wrap-up email. I sent that email to the supplier, which directly after sending it, confirmed it with a reply to my email.

Once I agreed to the contract, the signing stage or phase was next. It’s basically just both parties signing the contract. For traditional companies, the contracts are still based on paper.

However, give yourself time and effort in moments when you have the opportunity to wrap up the deal directly when all negotiating people are still in the same room. I did this by sharing my screen on a monitor while writing my wrap-up email. I sent that email to the supplier, which directly after sending it, confirmed it with a reply to my email.

Once I agreed to the contract, the signing stage or phase was next. It’s basically just both parties signing the contract. For traditional companies, the contracts are still based on paper. However, modern procurement teams are using automated procurement platforms or software to take care of the contracting phase. Therefore, all contracts are saved on the database and are kept there for safekeeping.

Once the contract has been awarded, this is the stage where the sustainable procurement process cycle restarts to RFl and RFQ again, especially if you have closed short-term contracts. Depending on the length of your deals, there is also always the end of the contracts to observe.

Normally, most automated procurement systems come with a feature where the program itself will check for every contract used during the procurement process.

Once all contacts are collated, the program will give an alert regarding an incoming end-of-a-contract opportunity. If you have not automated this, please make sure to create your own file to keep track!

Furthermore, your sustainable procurement goals may change. Thus, you must incorporate all your goals in all new negotiations with suppliers. This will allow them to know what are your expectations and what sustainability requirements they need to meet for them to be awarded the contract.

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Conclusion

Understanding sustainable contracts is pivotal for companies aiming to integrate ethical and sustainable practices into their procurement processes. This article explores the definition and importance of sustainable contracts, shedding light on their role in promoting environmental and social responsibility.

Additionally, valuable tips on managing contracts are provided by the founder of Procurement Tactics, emphasizing the significance of the contracting phase in achieving sustainable procurement results.