Delivering Visible Profitability for Dealer and Customer Commercial Agreements.
A diversified industrials client had a dealer and sales agreement structure built for a different era of their business. Contracts were complex, inconsistent, and leaking value — particularly in mining. We rebuilt the contracting framework, integrated ESD objectives, and gave leadership the commercial intelligence to actually manage their agreements.
The Problem
In 2018, a diversified industrials client faced challenges in optimising their customer, sales, and dealer agreements across various sectors, particularly within the mining industry. The client needed a streamlined approach to contract management that would not only enhance operational efficiency but also align with Enterprise and Supplier Development (ESD) objectives. Additionally, the client sought to integrate ESD goals into their procurement and supplier agreements and required ongoing support in managing contract-related activities, including profitability analysis and price escalations.
The Engagement
We partnered with the client to deliver comprehensive support across several critical areas:
Development of a Contracting Playbook: We created a comprehensive contracting playbook, incorporating best practices in contract management frameworks and processes. This playbook served as a guide for the client's teams, ensuring consistent and efficient management of customer, sales, and dealer agreements.
Integration of ESD Objectives: We integrated the client's customer agreements within the mining sector with their ESD objectives, ensuring that procurement supplier agreements were aligned with regional ESD strategies. This integration was crucial for operationalising ESD plans and meeting regulatory requirements.
Profitability Model Advisory: Our team provided strategic advisory services on profitability models for the client's mining contracts. This included analysis and recommendations to optimise contract terms and ensure sustainable profitability.
Ongoing Contract Management Support: We offered day-to-day support in various contract management activities, including:
- Contract Drafting: Assisted in drafting contracts to ensure they were aligned with the client's strategic goals.
- Price Escalations Management: Managed contract price escalations to mitigate financial risks and maintain profitability.
- Contract Monitoring: Conducted regular monitoring and evaluation of contracts, with a particular focus on the effectiveness of ESD operational plans.
The Client Benefits
Our involvement in the project provided the client with several significant benefits:
Streamlined Contract Management: The contracting playbook enabled the client to standardise and optimise their approach to contract management, leading to more efficient and effective operations.
Enhanced ESD Compliance: By integrating ESD objectives into customer and supplier agreements, the client was able to operationalise regional ESD strategies, enhancing compliance and contributing to community development goals.
Improved Profitability: Our advisory on profitability models for mining contracts helped the client optimise their financial outcomes, ensuring that contracts were both commercially viable and aligned with long-term business objectives.
Ongoing Operational Support: The continuous support we provided in contract drafting, price escalation management, and contract monitoring ensured that the client could proactively manage their contracts, reduce risks, and maintain control over contract performance.