Supplier contracts are typically renegotiated on an individual basis as they reach their expiry date, but there are instances when a business may need to review the vast majority of its supplier contracts at the same time – usually because of financial, regulatory or technological changes.
The challenge here is the large volume of supplier contracts that will need to be dealt with – often within a specific timeframe and while also ensuring continuity of service. At Efficio, we have deep expertise of working with businesses to design a contract remediation process at scale. Our approach includes leading on complex supplier negotiations to achieve the desired outcomes for our clients in terms of contractual relationships.
How we work
The first step of a contract remediation process involves identifying, locating and documenting affected contracts – particularly challenging if information within an organization’s contract database is out of date or missing.
Contracts should be categorized with priority given to those suppliers that are considered business critical. A treatment strategy for each category will help to determine how contracts are managed, as well as informing any subsequent negotiation process. Contract treatments can vary depending on the circumstances, from novation due to changes to specific agreement clauses to termination or simply leaving an agreement in place with no action required.
Once contract treatment strategies have been implemented, it’s time to engage with suppliers to agree the new terms and conditions. If proposed treatments are declined, contractual negotiations will be required to reach a suitable agreement.
Financial institutions have faced pressure to reorganize their operations following the 2008 financial crisis and in an uncertain economic environment. This has led to the sale or separation of some of their business units. We have worked with acquiring or spin-off entities to renegotiate contracts with the supply chain, as well as with disposing banks that need to contract back services from the sold business unit or source them from elsewhere.