Showing Contracts Who’s Boss: Implementation and Compliance Best Practices [Part 3 of 3]

In part 3 of this 3 part series, the focus is on necessary steps and creative methods of obtaining compliance.

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Every stage in implementation and compliance is an ongoing process where strong relationships yield the best results. Now that we’ve gone through pre-implementation (read the first post in the series) and implementation (read the second), we’re at the last stage: compliance.

Education and support is critical for fulfilling compliance goals. When employees use non-contract supplier products and services, this holds the organization back from meeting its goals. Employees must be educated about the offerings and value-added components beyond price. This results in greater adoption and utilization of the supplier relationship.

Compliance communication materials don’t have to be boring

Education and awareness can take various forms, from email or hard copy fliers for end-users to webinars for key decision makers. Get creative and go beyond the standard channels of communication for new contracts. Try email, videos, podcasts, web and mobile communication to improve awareness. Get the word out in ways you know employees will read and understand. Regardless of the medium, the objective is to deliver the appropriate value proposition message targeted for the specific recipient.

Creative methods of achieving compliance

The pressure on procurement to reach compliance goals has resulted a variety of creative methods to identify and discourage non-preferred supplier spend. Some examples include:

Modification of terms: If procurement is short on internal resources needed to drive compliance and there are continuing issues with the use of non-preferred suppliers, consider providing favorable terms to preferred suppliers while setting slightly unfavorable terms for non-preferred suppliers. The resulting service levels will encourage buyers to purchase through the preferred supplier.

Purchase tracking: If the internal resources are available, identify all non- preferred supplier purchases via PCard and directly target individual non-compliance. If PCard’s are unavailable, request monthly or quarterly reports from suppliers to determine noncompliance among each location.

Missed opportunities: Gather data to show senior management the missed savings opportunities due to use of non-preferred suppliers. By documenting and demonstrating these missed savings opportunities, executive management may be inclined to provide additional support as needed. In addition, this data can be shared with rogue buyers as proof that their spend is impacting the bottom line and as incentive to comply with the new agreement.

Employee incentives: Utilize the power of brand awareness by offering an employee discount purchase program through the preferred supplier. This program can also be another method used to track purchases.

Be sure to measure supplier performance

Compliance goals are important, but they don’t offer much insight into supplier performance and your satisfaction with their efforts. You need other metrics: surveys, benchmarks and scorecards. A supplier scorecard can measure performance on the supplier’s activities during implementation and compliance. All relevant departments/locations should evaluate suppliers, which will offer a perspective of how they are perceived and where they are being utilized, or an explanation as to why they aren’t being used.

Wrap-up

Begin with the end in mind. From the very beginning of the buyer/supplier relationship, plan for a smooth implementation and push for compliance throughout the term of the agreement. Keep your eye on the prize of compliance. All components of the contract rollout outlined in these three posts—pre-implementation, implementation and compliance—will impact the success of the program and the buyer-seller relationship. Both sides are more accountable when implementation and compliance are achieved.

Your implementation process will continue to develop and improve with every new supplier and agreement. You should begin to see more detailed plans, a focus on total cost savings and engagement among other functions within the company. Your organization will also discover additional ways to drive compliance as you gain experience. The key is to discover the processes that are a fit for your specific organization’s needs; this will ultimately contribute to the strategic growth of the procurement department.


Katie Virtue: Director, Category Management, Travel at Corporate United
As part of Category Management Team, Katie Virtue is focused on carrying out Category Lifecycle Management efforts across CU’s indirect spend offerings. She oversees the Travel vertical, including Car Rental, Travel Management, Meetings & Events Management and Corporate Housing Solutions. Katie works with members to evaluate CU’s offerings and to bring them a unique experience while collaborating with suppliers to achieve mutual partnership goals. She previously worked in the consulting industry focused on business continuity projects.