Given the multiplicity of firms offering digital transformation initiatives and the challenge that selecting the right provider for your needs presents, it is incumbent on supply management professionals to ensure that the needs of the organization are accurately defined and embraced by senior management.
This sounds like common sense but notes that in 2017, the World Commerce and Contracting organization sponsored a study of its global members and found that, for that year, the $13 B USD spent on digitization projects, over $900 M USD of the spend on those projects did not return a single benefit. That means that almost 70% of those corporation funds were lost.
Why?
A review of the World Commerce and contracting organization’s “Ten Pitfalls to Avoid in Contracting” presents some compelling elements that point to the failure of adequate change management.
Those pitfalls are available on the World Commerce & contracting website at Ten Pitfalls to Avoid in Contracting (worldcc.com).
We will not discuss all of the pitfalls here but suffice to say that over the last ten years the list has changed extraordinarily little.
From a change management perspective, the pitfalls that stand out are 1) lack of clear scope and goals, 2) failure to engage stakeholders, 3) contracts lack flexibility, 4) insufficient focus on governance and 5) poor handover to the implementation team. These five pitfalls plus the other five listed in the article have been found to lead to contract value erosion of 9.2%. Very few companies can afford to maintain that type of erosion.
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(A) Technology, design, cost, co-development, quality, intellectual property, and risk management
(B) Delivery, cost, and quality
(C)Supplier contract and relationship
(D) The supplier's history with the buying company
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