The document discusses contract and supplier management in procurement. It provides an overview of the procurement process and outlines why contracts should be used to drive performance, provide legal certainty, and reduce risk. It then describes simple and advanced approaches to contract and supplier management, including using a Pareto analysis, portfolio matrix, and supplier preferencing matrix to prioritize efforts. Key aspects of contract management discussed include defining KPIs and SLAs, conducting periodic reviews, and focusing on continuous improvement. Developing proactive, effective, and assertive behaviors is also emphasized for building collaborative supplier relationships.

1. Contract &
Supplier
Management
IPPC Discussion
10 October 2020

2. Adhe Priyambodo
Working history
Procurement Manager ASEAN,
PT Shell Indonesia
Direct Procurement Manager,
PT Frisian Flag Indonesia
RM Procurement Manager,
PT PZ Cussons Indonesia
Raw Material Manager,
PT Sepatu Bata, Tbk
Material Planner,
PT Henkel Indonesien
2
About me
Procurement and supply chain
management professional with 15 years
experience in various industry of
multinational companies.
Education
Engineering Physics,
ITS Surabaya
Chartered Institute of Procurement
and Supply (CIPS),UK
adhe.priyambodo@gmail.com
Adhe Priyambodo
priyambodo.net

3. Key Topics
3
Contract &
Supplier
Management
1.
Why?
2.
How?
3.
Practical
approach

4. Procurement Process
4
Tender
AwardPre-award
process
Post-award
process
Defining
needs
Supplier
selection
Market
analysis
Contract
Management
Supplier
Management+
Making sure that
goods/ services are
delivered as per
contract agreement
Forming & developing
relationship with
supplier for long term
mutual benefits

5. Current Condition
5
PO
only
PO
+
Standard
Term
& Condition
Contract
+
PO
A B C

6. Why should use contract?
6
Drive
performance
Legal
certainty
Reduce
risk
Support
collaboration
Implied term vs
Express term
Battle of
Forms
Performance
management
• KPI
• Target
• Consequences
• Breach
• Liabilities
• Intellectual
Property
• Dispute
• Transparency
• Communication

7. Implied term vs Express term
7
Implied terms Express terms
• Sale of Goods Act
• Good being fit for
purpose
• Negligence
• Confidential breaches
• Specification
• Delivery details
• Payment term
• Warranty
• Contract period
• Governing Law

8. Battle of Forms
8
Supplier Buyer
RFQ
Quotation
PO
Delivery Note
Invoice
Good Receive
Order Confirmation

9. How? : Define priority & focus
9
Simple Advanced
Pareto/
ABC
Level of
Competition
Portfolio
Matrix
Supplier
Preferencing
Matrix

10. Monopoly Oligopoly
Monopolistic
Competition
Perfect
Competition
Low High
Simple Approach
10
Pareto/ ABC Level of Competition
100%
%ofspend
% of supplier
50%
80%
95%
100%
0% 50%20%
A
B
C
More
attention
Less
attention
relationship
focus to
maximize
add value
relationship
focus to
supply
security

11. Advanced Approach
11
Portfolio Matrix
Spend
Supply risk
High
Low High
Strategic
Low
Bottleneck
Leverage
Routine
Supplier Preferencing
BusinessValue
Attractiveness
High
Low High
Core
Low
Development
Exploitable
Nuisance
Focus on
long term
partnership
Focus to
drive value
realization
Focus to
simplify
buying
process
Focus to
continuity &
mitigate
risk
Develop
backup/ exit
strategy
Develop
partnership

12. Practical Activity
12
Include contract
draft in tender
document
Repetitive &
High-value
goods/services
covered with
contract
Use SLA or KPI in
the contract
Periodic
review
Continuous
Improvement
Proper
supplier
integration

13. SLA & KPI
13
Service
Level
Agreement
(SLA)
Minimum quality of service
that meets business needs
Based on
output
Generally
offered
by
supplier
May
have
tiers
Key
Performance
Indicator
(KPI)
Motivate supplier
(Incentive
De-incentive)
Early
identification
of risk
Improve
quality
Improve
communication
S.M.A.R.T
Example:
• On-time/In-
full
• Reject rate
• Safety
compliance
• Waste
reduction

14. Periodic Reviews
14
Frequency Agenda Participant
Quarterly
Operational
Review
Procurement + User +
Supplier
Yearly
Strategic
Review
Include Business
Leader of both parties
Agenda
KPI achievement review
Demand forecast & supply capability
Business & market update
Continuous Improvement initiatives

15. Continuous Improvement
15
Specific Objectives
and Targets
Project base
Milestones & Timeline
Allocated resources
KPI achievement improvement
Example of Focus
Waste reduction
Sustainability / CSR

16. Behaviour to develop
16
Proactive
Supplier relationship do not develop by their own
→ They need input by both parties & proper planning
Effective
Communication
• Organizational & personal
• Consider culture
• Listen, Open mind, Honesty, Empathy
Assertive
Know and able to express what we want
at the same time willing to listen of others

17. Collaboration
zone
Collaboration Zone
17
transparency
Communication frequency

18. Credits:Presentation template by SlidesCarnival
18
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