Prepare Your Team to Play the Game of Inflation
It’s been said that the best offense is a good defense, and playing the game of inflation is no different.
There’s a level of rivalry between procurement teams and suppliers, where each performs a sort of calculus. Suppliers want to provide the least amount of product for the most money and procurement teams want to acquire the most product for the least amount of money. Whoever has the time, resilience, and staffing to sift through hundreds, or even thousands, of contract clauses to hammer out the best position – “wins.”
Add inflation to the mix, where no one knows what the “right” price is, and efficient contract analysis can mean the difference between cost savings for your employer or being taken advantage of by those capitalizing on the uncertainty.
How Do I Play Defense in Contract Negotiation and Management?
When thinking about defense, we’ll start with location. Where is the contract housed? Being able to access and search through every single contract at any time is a baseline requirement you should have for your contracting and cloud storage tools.
Effective analytics tools help you access even deeper knowledge – right at your fingertips. These tools are able to search for language around price escalators like: increases tied to cost-of-living adjustments (COLA), and changes in Consumer Price Index (CPI.) They can also help you discover if there are caps to these increases.
Having all this information readily available supports you in defending the contracts you have in place against suppliers acting in bad faith as contracts age – and allows your procurement team to focus on more immediate concerns.
What Does the Best Offense Look Like?
Strong existing contracts are one thing, but the best offense means being in control when negotiating new contracts. How do you write contracts for products and services when inflation concerns are on the rise and running a competitive tender takes time you just don’t have? Inn standard, lengthy RFP process, early promises on pricing and other terms may potentially go by the wayside, leaving your company vulnerable to mercenary tactics from suppliers.
What if there was a way to establish good-faith negotiations amongst a wide range of suppliers, with negotiation and contract award taking weeks instead of months? ContractAI provides an upfront and transparent process in which you negotiate terms before down-selecting. Having a range of terms around limitations and liability for all to review eliminates the “battle royale” that can come as negotiations drag on with down-selected suppliers. That way of handling business is overdue for a change.
Being able to negotiate fair terms and track them over time is an ideal way to “futureproof” contracts against inflation and other unknowns that inevitably come along.
Inflation Concerns Don’t Mean Throwing the Game
By offering choices in terms up front, ContractAI enables procurement teams to share highlights from their playbook without throwing the game.
One of these highlights is giving suppliers options on the terms where you have flexibility. The supplier that offers lower risks for a fair price wins the contract. This creates a streamlined and open RFP process suppliers will appreciate (almost) as much as your procurement team, legal, and finance teams will.
Beyond negotiation is contract management. With a contract in place, that is fully accessible at any time – you are confident in the terms you’ve agreed to and can reference them quickly when questions arise. Analytics capabilities help you keep track of terms in your company’s entire contract repository.
With all these tools at your disposal, your procurement team will be able to play and win the game of inflation.
