If you’ve read my books, or my articles about on time delivery, you’ll know that I am a huge fan of the contract review process.
This is a term that I use in the broader sense. Looking at the factors around a contract review can make a huge difference to order delivery. In this article, an order can relate to a service, project or manufacturing business.
Done right, a contract review can help you to reduce staff stress, improve profits and win new work. Solid on time delivery performance can lead to notable increases in new business.
I’m going to run through some contract review items with the aim of sparking your imagination. If you can think how this applies to your own business then I will have done my job.
Have you got the capacity?
One you have agreed with the contractual terms of the order, do you have the capacity to deliver it? There are two aspects here that I would like to draw your attention to.
1. Do you understand your current workload and the effect it has on your capacity?
2. Are you able to negotiate deliveries with your customer?
If you don’t have a grip of your capacity, find a way to gauge your workloads. Start with your bottleneck resources.
If you can’t negotiate the delivery date, you need a set of strategies to relieve this situation. This could be overtime, agency staff, shift pattern changes, hiring etc… Develop your responses so that you don’t have to re-think this every time.
Do you have the capability?
Next up is capability. Can you actually deliver the order? If you have any doubts then the contract review is the place to voice these concerns. Engineering / technical challenges need establishing upfront.
Getting crystal clear about what the risks are is a key output of a good contract review process. It hurts on time delivery performance, and profit, if you ignore these challenges. Getting close to the delivery date and then realising that you’re screwed is a bad strategy!
If you have the capability, great. If you don’t, find it, hire it or develop it ready for the point of use.
Are your supply chains ready?
Materials, labour and equipment don’t appear like magic when you need it. If you need materials, tools or personnel then explore this ahead of your contract review.
Don’t assume that everything will be available to you when you need it. Double check anything that is out of the ordinary and ‘put your ducks in a row’.
Does your customer have any specific requirements? Checking this during the contract review is a lower cost alternative to fixing a problem at the end!
You should have a register of specific requirements. You can include these with your internal documentation. If you don’t have this, then developing a simple spreadsheet is a good place to start. Don’t get tripped up by this simple check.
Lastly, don’t forget to inform your customer about delivery dates. In most industries it is customary to confirm the order details in a formal fashion. This is often called the sales acknowledgement.
Doing this is not only good customer service but a good practice for your business. If you make this the last step in your contract review it can help to form the right habits. This will make your contract review part of normal day to day business.
The result of a good contract review
So, what happens if you do the contract review process well?
For most businesses these benefits start to appear:
- Stress starts to drop from the working day.
- Customer deliveries improve, both in term of on time delivery and profit margin.
- Your customers become happier.
- More work starts to come your way.
The last point is important. Most customers aren’t looking for ‘wow’, they’re looking for reliability. Getting the contract review right is part of this equation.
If you’re a business that gets stuck with delivering on time and feel out of control, please pause. Revising your approach to the contract review can help. Many businesses pay this process lip service and get the results you’d expect.
Don’t be one of these businesses!