Contract management must go from a complex discipline to a widely used business success tool
Today was one of those crap days, where you wish you just had stayed in bed. Everything just went wrong, and, as it should be, it all went wrong when I had woken up earlier to have a productive day, had a fulfilling prayer time and an hour long exercise routine. I was about to throw this day in the memory bin, when I came accross Forbes Africa's article on JN Ayuk, the leading Energy lawyer. Centurion has offices in 5 countries across the continent. The 38 years old says "I paid a lot of attention towards to the energy sector because I felt most of Africa’s problems came from a contact fight (…). Even more apparent was the fact that Africans were not part of any kind of deal making structure. Simply, Africans were not at the table or even in the room".
Those words echoed in my mind as the very same Reason I decided to launch my business as a contract analyst. I knew SME's needed my expertise, for they are completely helpless in front of their clients, mostly big oil companies who, as Ayuk points it, "come in with a certain arrogance; looking down on little folk which only fuelled me to beat those opposing counsels lawyers who were trying to rob Africans of their resources"*
I was reassured of my long-life fight for business scalability through sound contract maangement. Tony Elumelu sums it up: “We are limiting our own potential by not building our internal capacity to add more value locally”. The best-in-class do not only exploit straight-from-the-harvest products, but run extra miles down the supply chain track by making finished products.
Apart from the obvious role to be played by financial institutions and governmental agencies, such as financial support and drastic infrastructure improvement, it is time, from a supply chain perspective, and complementary to the worthy solutions provided in the article, that SME’s grasp the collar of success for generations to come. Below a few tips:
1. BESPOKE COMPETENCY TRAINING
SME’s must consistently engage themselves in training that will truly make them “entrepreneurs”, which, in Latin, means “holding by the hand, mastering something”. Many fail to secure agreements due to managerial amateurism. Technical competency building in our field of endeavour, market forces benchmarking skills, business lifecycle sequential steps mastery –from commercial registration to tax and labour obligations- are part of the success formula to stand out from the crowd. Knowing how to carry a company presentation or present a business plan helps the entrepreneur strengthen his confidence and grow his communication skills, which account for much of the leading entrepreneur’s character. Contract management is important because it ensures that all parties meet the contractual obligations in a lawful and fair way. It allows better cost control, commercial pricing, and negotiation leverage. As you grow into it, your message becomes sharper, your product offer standing out as a must-have for specific reasons that change your clients lives.
2. WELL-BUILT QUALITY PROCESS
You do not need to be a continental corporation before you implement your own processes. SME’s who wants to reach a higher level of performance can start with a well-informed but very simple audit: the recommendations deriving from it can help build good foundations of procedures. The next stage is then to draw a supply chain process mapping. For example, the “Mango jam process” goes from production to preparation, packaging, with red flags controls required. The process mapping entails every stage and gives indication of risks, norms or quality controls checklists. It helps us ensure we stay at the top of the competitiveness game of our products or services.
By reviewing regularly the way we operate, we identify early any issue, required corrective actions, and most importantly, preventive initiatives. As our continent holds the highest rate of womenpreneurs -27%-, associations and cooperaties lookking to improve their production capacity must work on this stage double-time to ensure maximum effectiveness. Process and procedures embedded with well-built mapping, will strenghten your business' vertebrae.
3. EXCELLENT STAKEHOLDERS COORDINATION
“The SME must improve its financial literacy, thoroughly prepare its business plan, and study the market; both banks and SMEs must play their own part », once said Didier Acouetey, CEO of Africsearch, in Forbes Afrique. Although we are swimming on a see of forums, training, coaching, mentoring and other seminary initiatives, not enough is being done to tackle the first weakness of our entrepreneurs, the lack of adequate Financial proficiency. Subject matters expertis are key partners in this sense.
Our Bank: Do we take the time to meet with our account advisor? To go together through our credit rating scores, accounts movements, financial results? What are their best practices tips for a successful upcoming year’s financial plan?
Our suppliers: what is our position on their customer profiling? Are they committed to ethical sourcing? How can they promote cost reduction?
Our customers: Who are they? What are their needs and challenges? What is their consumption trend?
Our competition: Who is our competition? What are their strengths and weaknesses? Who is in monopoly?
Regulating bodies: Do we accurately follow entrepreneurial registration and operating process? What is their advice toward SME promotion?
4. MASTER YOUR SUPPLY CHAIN CYCLE
The term “chain” implies moving from one link to the next in a logical and orderly networking fashion. Good knowledge of supply chain parameters is especially important in our countries, as SME’s face excruciating challenges due to lack of modern logistics infrastructures, of official consumer’s behaviour statistics or rigorous consumer affairs practices enforcement.
How do we manage distribution, payment, recycling or production deadlines? What is the stock rotation ratio? How long will final inspection take before labelling and packaging? Have a drafted a logistic risk mitigating map? It is better to implement best practices from the onset, than to try catching up when the company has already grown enough to commit to its customers.
At bottom-line level and from an added-value perspective, learning more about our supply chain cycle definitely empowers us to take charge and drive the continuous improvement of our companies, both in pre and post-award phases of the contract life.
5. GET SOUND CONTRACT MANAGEMENT SKILLS
The main issue faced by the SME’s I coach is their lack of contract management skills. This knowledge gap allows big corporations to carry uncompetitive practices such as unfair deadlines during invitation to tenders, and heavily prejudicial penalties that are embedded in contract terms. The SME usually focuses on reaching award stage, failing to carefully read the contract, let alone negotiate the terms so they reflect the rights and obligations of each party. Take the time to read the scope of works, the termination clauses, the reporting requirements, and payment deadlines; plan the negotiation outcomes. Many consultants or Administrating SME affairs can also provide valuable legal and commercial advice to you during tendering or negotiation stage in a confidential manner. A thriving SME must excel in how to negotiate a contract, how to put forward a well-informed commercial proposal to potential customers, how to benchmark the market or track suppliers.
As entrepreneurs, we should learn to work together, in what Bolstorff and Rosenbaum call “The sardine strategy: for schooling fish, staying together is a way of life. Fish in a school move together as one” (Supply Chain Excellence, handbook for dramatic improvement). Some of these initiatives can be costly, and associating other companies of the same sector can share the costs while giving room to experience sharing, for the benefit of all. We African SME’s must display a winning attitude. Fully engaging ourselves to improve our supply chain competitiveness will be like the hammer that breaks the rock of any crisis. The wind of a positive continental twist, thanks to private sector, is definitely blowing ! Contract leading you to longer term visibility of your parntership, you enter into the land of scalability and sustainable competitiveness.
“The only way to move forward to where we want to go in life, regardless of you circumstances, is to initiate desired change and to address unwanted change constructively”. Dr Myles Munroe, Principles and Benefits of change.