Contract Management for Logistics Providers
Top priorities of an efficient logistics management practice may include the following:
Safety - ensuring all contractors and employees are safe at all times;
Security - ensuring the security of all business information held for others and the company, as well as the security in relation to all products and services delivered;
Quality and speed of delivery - ensuring all products and services are delivered professionally and appropriately and in a timely manner;
Satisfying customers - this may include ensuring customers are satisfied with the price they are paying for goods and services, as well as ensuring their expectations are met; and
Profit - Ensuring the price charged is appropriate so the organization can secure a profit.
As General Counsel or Contract Manager or Logistics Practice Leader working for this area how do you deliver these objectives in relation to the management of the numerous contracts and policies you handle day to day?
Some of the contracts you may deal with may include:
Master Services Agreements for client companies for various products and services such as warehousing, transportation and servicing of equipment;
Employee contracts and contractor agreements;
Workplace policies - for example, in relation to how work is to be performed;
Insurance Agreements - to ensure all services carried out by the company are covered for inherent risks;
Contracts for products or services used by the company - this may include software utilized by your company to ensure efficiency in performance.
Below are some things you may want to consider in relation to each of these to ensure you are working towards your company’s objectives.
Master Services Agreements for the services you are providing
You may need to balance the expectations of your company’s client for price and speed with the requirements your company has for providing a safe working environment and ensuring security. This may mean to keep customers satisfied you need to explain why a process will take a certain amount of time and why the price is what it is to your counterparties in the negotiation stage. It also means you may need to have a system in place to follow how your company is tracking on delivering and update your counterparty accordingly, once the work agreed upon in the contract starts being carried out.
Jan Runge Petersen and Maurits Speksnijder both experts in logistics contract management note that often with these sorts of contracts things turn out to be quite different in practice to what was initially agreed upon in the negotiation stage. They suggest it is a good practice to write a clause into the contract that enables parties to review and revise the terms of the contract to align the initial plan with reality six months after the commencement of the execution. You can read their article on managing the logistics contract management process here - http://ow.ly/4mWPHO .
There may be several agreements you have for different products and services and these can vary according to the jurisdiction within which your company is working or the work that is being carried out. To add to the quality and speed of delivery your company is known for as well as adding to company profits through efficiency, you will want to ensure you use the least amount of templates for the various services contracts you draft. This is to ensure the issues that arise from this template come to the fore, are tried and tested and you can keep ahead of any issues with them as soon as an issue is raised. This also ensures less work for the creator of the contracts as well as anyone who ends up having to review these contract at a later stage -- for example, if a dispute or litigation arises.
To carry out the recommendations listed above you will need a contract system that can easily build the contract you need for a specific situation from a master template and one that allows for easy amendment as required. You will also need a contract management system that captures all communications in relation to negotiation and amendments in the one place for ease of reference in case it is required in the future.
So there you have some tips for how to manage your contracts in the logistics context. We will continue in our second part of this two part article series with considering some other contracts that are common in this space.
In relation to the contract management software system that your company decides to purchase, you should ensure it is one that enables you to do all that is recommended by this article.
ContractRoom, www.contractroom.com, is one such contract management system - to learn more about how you too can “negotiate less, agree more” schedule a live demo by clicking here: