We discussed in our last blogs how successful companies invest in innovation with their people skills, processes and tools. The result: improved commercial excellence capability leading to higher operating profits.
So what has been changing in Processes in the last decade? The game has been changed in Sales and Procurement capabilities with two key themes;
1. From a Risk & Compliance driven approach towards a Value Centred approach.
Where in the past the commercial processes were focussed on controlling risks, compliance & coordination and the distribution of activities intra-company. The processes were prescriptive with comprehensive manuals and focussed on a disciplined execution with standards to maximise the elimination of risks and focussed on internal efficiencies. In most of the cases owned and operated by Sales and/or Procurement organisations.
The innovation here is that the commercial processes do have a strategic fit and implements business strategy. The sales and procurement strategy and processes are owned by the organisation as whole instead a specific functions; a cross functional approach. This is enabled and underpinned with innovations in the triangle Process, People and Tools, see also our previous and next blogs. A clear accountability for deal opportunity owners with the support of peers and small virtual teams to create and increase value at stage gates of Strategy, Deal development & Negotiation, Execution and Operational Fulfilment. A deeper and fit-for-purpose, faster and more yielding decision making process with value outcomes which are closer to the expectations of the organisation, customers and suppliers.
2. From Intra-company Stakeholder Alignment towards Building and Maintaining Inter-company relationships.
Where in the past the commercial processes were focussed in getting stakeholder alignment of various functions within the company at the sales and procurement transaction level of the contract. Resulting painful exposures suboptimal contracts as the outcome of the decision making process, not always understood by the organisation and delays in agreement and often lead to incorrect fulfilment of the promises. These performances are not always detected due to the mass categories/products and complexity of customer/suppliers relationships to make it happen. Leading to diluted company strategy implementation, suboptimal customer and supplier satisfaction and impact on the relationship with the ultimate outcome of value erosion.
The innovation here is building strategic partnership of suppliers and customers to enhance value creation by increasing competitive advantages. The commercial decision making process includes and drives here an improved market positioning with differentiated service/product offerings and approaches driving increased value enabled by a clear contracting strategy with a transparent actions, tiered customer/supplier relationship selection, value propositions covered with segmented contract models where customers and suppliers a swiftly agreeable to execute and operate. An Inter-company of verticals approach with main focus to increase competitiveness, effectiveness and efficiency, facilitated by process innovation.
Summarised, Processes – more focus to the front-end and streamlined at the back-end of the commercial decision making process together with strategic customers and suppliers, moving the traditional commercial transactions towards commercial value based and relational arrangements of companies are leading to higher profits.
Interested to get more about this? Read our upcoming Blogs.
We from BloomingContracts.com have experience in how to make this work for you successfully, if you want to know give us a call.