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Proactis Holdings Plc

When Neglected Supplier Contracts Bite Back

Imagine working hard to buy a new sports car – only to leave it gathering dust in the garage, while you renew the insurance automatically and take taxis everywhere instead? It sounds bizarre, but there’s a striking parallel in the world of corporate procurement.
Every month, countless numbers of Procurement teams battle hard to win ‘best value’ agreements with suppliers. Specifications, prices and quantities are hammered out and signed off – as both parties look forward to a deepening business relationship.

But sometimes these crucial contracts slip from view and all their potential savings are lost. In fact, rather than being a benefit to organisations, they can become a costly headache. Relationships with suppliers can sour too, when prized agreements get overlooked.

So what’s going wrong?

Put simply, a contract is only as good as the way it’s managed. It’s easy to point the finger at Procurement teams. But the problem is that contracts are living entities with births, anniversaries and a purpose. Take your eye off them for a moment and they can wander into trouble at key moments during their lifecycle. And this happens all too easily because Procurement teams are frantically doing so many other vital tasks.

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Disclaimer: Statements in this article should not be considered investment advice, which is best sought directly from a qualified professional.