Contracting private logistics service providers can be a unique opportunity to improve supply chain performance, but that performance depends on investing in and executing long-term logistics contracts.
Contract Life Cycle Management is the process of systematically and efficiently managing contracts creation, execution and analysis for maximising operational and financial performance and minimizing risk.
A contract is termed to be successful when:
- The arrangements for service delivery continue to be satisfactory to both parties, and the expected business benefits and value for money are being realised.
- The expected business benefits and value for money are being achieved
- The supplier is cooperative and responsive
- The organisation understands its obligation under the contract
- There are no disputes
- Efficiencies are being realised
An organisation should ensure that a contract should meet its needs, be achievable and affordable and address the following issues:
- Outcomes of the contract
- Critical success factors
- The possible alternatives, including existing contracts
- The risk including the extent and where they may fall
- Identification of any contingent needs and ramification of proceeding