SWOT Analysis

Simple SWOT Analysis for Procurement Professionals

Company Name
Business Planning Checklist
Using the Strength, Weakness, Opportunity, and Threat (SWOT) analysis framework, develop a checklist of the key activities that need to be performed when preparing a formal business plan in the table, below.
Activity Owner Completion Date
Strengths: Define the company’s current mission statement.
Strengths: Identify market segments in which the company will participate by conducting primary and secondary market research.
Strengths: Identify the company’s value proposition and how it will differentiate itself within the marketplace.
Weaknesses: Identify any barriers to market entry (for example, capital requirements, technical barriers, patents, and process barriers) that the company needs to overcome.
Weaknesses: Identify any risks inherent to the organisation that need to be mitigated so that the company can realise the business plan.
Opportunities: Identify areas where the current market is underserved that provide an opportunity for the company.
Opportunities: Identify any key processes, intellectual capital, or other resources that the company can use to its advantage in the marketplace.
Threats: Identify primary competitors, and then analyse competitor performance by using all available data and additional data that can be verified.
Threats: Identify secondary and potential future competitors that might affect the business plan.
Threats: Develop strategies for mitigating primary and secondary competitive threats.
<Add additional key business plan activity.>
<Add additional key business plan activity.>
<Add additional key business plan activity.>
<Add additional key business plan activity.>

Using a SWOT analysis is a powerful tool that is simple to use but effective in helping you understand your strengths, weakness, opportunities and threats. When you take time to understand the weakness and threats you are taking the first steps to actively manage and reduce threats. Don’t be caught off-guard because you never know when something unexpected might happen, business is volatile and risks can crop up when least expected.

If you like the SWOT Analysis you might also like some other templates

RFI IT Software

Bullet points on what to include when issuing an RFI for IT Software

Briefing Document: A document which briefly summarises the project objectives, timescales, and the RFI/RFP process. Include a table of key dates, and be sure to include information about what you expect the supplier to include in their response.

  • Architectural Diagram(s): If relevant, it can be beneficial to include a diagram which summarises your current architectural landscape. This can help the vendor to understand the key systems that they will need to integrate with.
  • Response document: This should be a document which the vendor completes and returns. It can be useful to use a spreadsheet, with different worksheets for different areas.

o High-Level Requirements: A worksheet which contains the most significant high-level requirements for the project, along with space for the vendor to indicate how their solution would meet the requirement.

o Architecture: Questions relating to the architecture of the solution.

o Infrastructure: Questions relating to the infrastructure that the solution runs on.

o Licensing: Questions relating to the type of licensing agreements.

o Support Arrangements: What level of support is available, and how is it provided?

o Supplier/provider Company: Questions relating to the company, e.g. number of staff, locations etc. Are they capable of providing you with the level of support you need?

You may also want to consider holding a teleconference or meeting with each vendor shortly after they receive the RFI pack. This will provide them with the opportunity to raise any questions or concerns and will enable you to explain the project and RFI/RFP process in more detail. You will need to give the vendor a reasonable time to complete the RFI, to ensure that you get a quality response.

If you require a more generic RFI document you might like the RFI template.

Social Media RFP

Note this social media template RFP is from Hootsuite

[Your company name]

[Website] [Address] [Contact person’s email/phone number] [Project Name]


Project introduction

[Your company name], a [description of your business], is in need of [description of work/project]. We are accepting proposals in response to this request for proposal (RFP).

Project purpose and description

The purpose of this project is to [explain in detail why your company needs the work done].

This project requires [outline the duties and responsibilities associated with the project]. Our goals are to [i.e. build brand awareness, gain new social media followers, etc. List however many you have]:

  1. [Goal 1]
  2. [Goal 2]
  3. [Goal 3]

Proposal guidelines

In order to be considered for [project name], all bidding agencies must [list the requirements that each responding proposal must address, i.e. budget, timelines, and submission due date]:

  • Include a price proposal for the work, which should be no more than [dollar amount]
  • Outline a project timeline, including details such as key milestones and deliverables
  • Submit the application no later than [proposal due date]

Bidder qualifications

In order to be considered for [project name], all bidding agencies must [list the criteria that must be met in order for a proposal to be considered, i.e. agency experience and history, information on agency size, organizational charts, executive background, etc.]:

  • Have training in social media marketing and show certification [Hootsuite’s social marketing education and certificate program, for example]
  • Reference and outline relevant work/project experience in social media marketing
  • Provide a list of all personnel who will be working on the project—include resumes for each individual


[Outline here information about the timeline for the RFP process as well as the project itself—known deadlines, milestones, and potential roadblocks.]

Request for proposal timeline

Proposals in response to this RFP are due no later than [date].

Evaluation of proposals will be conducted from [date] until [date]. We will notify bidders during this time if any information or discussions are needed.

The winning proposal will be chosen no later than [date].

Upon notification, the contract negotiation with the winning bidder will begin. Contract negotiations will be completed by [date].

Notifications to bidders who were not selected will be completed by [date].

Project timeline

Project initiation phase must be completed by [date].

Project planning phase must be completed by [date]. Project planning phase will determine the timeline/schedule for the remaining phases of the project.

Proposal evaluation

[Your company name] will rate each application based on the following factors [in as much detail as possible, list the criteria that will be measured and describe what is suitable for each criteria]:

  • Relevant training/work experience [detail minimum requirement]
  • Samples of past work [explain how you would like this delivered]
  • Cost vs. value: Bidding agencies will be evaluated on the cost of their proposals based on the outlined scope of work

You might also like a generic RFP template

What Is Commissioning & How Is It Different to Procurement?

A brief introduction to Commissioning and Procurement

Commissioning is buying services for the public rather than an organisation, it is a defined approach to planning and resourcing public services.

Cabinet Office 2011 describes it as The cycle of assessing the needs of the people in an area, designing and then achieving appropriate outcomes. The service may be delivered by the public, private or civil society sectors.

Procurement is not commissioning. In this instance procurement is an element and specific part of the commissioning process.

i,e the procurement process will help appoint a supplier to carry out services

negotiate the best deal to ensure value for money

Monitor contract performance to ensure that it’s running effectively

Commissioning is useful when:

  •  Competition exists and suppliers want to provide their services
  • There is a compelling need for change
  • Change needs to be managed and should not be left to market forces

A procurement exercise to acquire goods and services is a key part in securing local services. Procurement strategy is driven by intelligence gathered in a commissioning strategy and can support in the following ways:

  • Invitation to Tender
  • Develop a robust SLA
  • Appoint a supplier to manage grants
  • Appoint voluntary organisations to do outreach work
  • Set up framework contracts to provide services for individuals at fixed rates

Writing a strategy

  1. Describe how you are going to effect change to meet the needs of the population
  2. Specify the outcome, the desired results
  3. Define the output
  4. Agree on ways of working
  5. Agree on inputs and resources required to deliver
  6. Write a business case
  7. Undertake a cost-benefit appraisal
  8. Write a market position statement to bring together data from the joint strategic needs assessment,  strategies, market, customer surveys into a single document.

This is a brief introduction on how commissioning differs from procurement if you need more information the Institute of Public Care is a good starting point.

Material Change to Specification Is It Dangerous?

What happens if you change your specification and its a material change after the tender has been issued?

What happens if our requirements change during the course of a procurement?

Any change to the specification must not be a material change.

The acid test is would a supplier who made a decision not to submit a tender or an expression of interest do so had the proposed change been in the tender at the beginning? If the answer is yes then this is classified as a material change. In this scenario, the best option is to stop the procurement and start again with the new requirement included.

Let’s review whats allowed in The Public Regulations 2015 and  some case law (National Savings & Investments (NS&I) and Atos IT Services Limited (Atos) ) on Material change

Regulation 72(1)(e) (non-substantial variation) of PCR 2015 states that

“Contracts and framework agreements may be modified without a new procurement procedure in accordance with this Part in any of the following cases:

…(e) where the modifications, irrespective of their value, are not substantial within the meaning of paragraph 8”. Regulation 72(8) states that, inter alia, “a modification of a contract or framework agreement during its term shall be considered substantial for the purposes of paragraph 1(e) where… (d) the modification extends the scope of the contract or framework agreement considerably”.

On application of Regulations 72(1)(e) and 72(8) to the facts of the case, the court found that Edenred’s argument that the amendments to the Contract included services which were not originally contemplated and which amounted to a material change did not satisfy the requirements of Regulation 72(8). This was on the basis that:

  • the OJEU Notice set out the intention to expand the B2B Services up to a maximum value of £2bn
  • the advertised contract and related procurement documents envisaged and catered for an expansion of the services as was being contemplated and further stated that the winner of that contract (namely Atos) should be capable of providing such additional services in the future
  • the original procurement process and ultimately the contract awarded to Atos in 2013 was unchallenged, and
  • “contract documents” should include reference to all tender documents, which included the OJEU Notice, where the potential expansion of services was unequivocally set out.

The court also applied Regulation 72(1)(a) which states that

“where the modifications, irrespective of their monetary value, have been provided for in the initial procurement documents in clear, precise and unequivocal review clauses, which may include price revision clauses or options, provided that such clauses (i) state the scope and nature of the possible modifications or options as well as the conditions under which they may be used, and (ii) do not provide for modifications or options that would alter the overall nature of the contract or framework agreement…”.

The Supreme Court held that the change provisions in the Contract were sufficiently clear to meet these criterion, namely that they restricted the additional services to the B2B Services outlined in the OJEU Notice and also set out some guiding principles for the inclusion of the new services in the Contract so as to restrict any increase in Atos’s profit margin and to prohibit changes to risk allocation under the Contract. This, in turn, satisfied Regulation 72(8)(c) in relation to a change in the “economic balance” of the parties under the Contract.

Can contracting authorities protect themselves from a challenge for material change by including all potential future changes and additional services which may be required in the OJEU Notice?



Contracting Authority Public Sector In-House Bids

If you are a Contracting Authority should you consider in-house bids?

The first thing to consider is whether if you are allowed to submit a bid. Your in-house team must be a separate entity by forming a company or legal entity that can enter into a contract with the contracting authority. The in-house bid has an unfair advantage because it would be relying on the contracting authorities premises, and assets etc.

An authority could use a tender to help it decide whether if it wanted a make or buy solution. The internal bid would be for the make solution, however, the authority would need to make it clear in the tender instructions that there is an option to abandon the tender process and not award the contract.

Suppliers in the market may not want to enter a bid if there is a chance that the tender could be scrapped. They may also be wary about sharing commercial know-how and view the tender exercise as a fishing exercise for ideas generation rather than genuine desire to award a contract.

This could send the wrong message to the market may be that the authority is not serious about outsourcing its requirement and the contracting authority should take into account their reputation requirements. Next time they may find that they have fewer suppliers bidding. Some suppliers might be put off which means there is a risk that the best solutions are not being put forward

Defending a challenge might be more tricky. Conflict of interest will need to be de-risked.

Are there any advantages?

An in-house team operating as a separate entity know the culture and systems in place at the Authority and may be best placed to deliver a cost effective solution.

In RMP v Brent, the London Borough, together with several similar boroughs, clubbled to together to create a mutual insurance company called London Authorities Mutual Limited (“LAML”), a private company limited by guarantee established and wholly owned by the local authorities concerned. Earlier, Brent had also commenced a procurement process inviting bids from insurance providers, of which RMP was one. When the project to establish LAML became a reality, Brent terminated the procurement process it had been running and entered into a contract directly with LAML with no further competition. RMP brought a claim arguing that this contract should have been opened up to competition.

Brent had also started a procurement process inviting bids from insurance providers. RMP was one of the bidders. They then stopped the procurement process.

A claim was brought by RMP because there was no competition in scrapping the procurement and awarding to the mutual instead. (part-in house) relying on the  exemption in the Teckal case aka the  contracting authority has set up a wholly-owned service provider:

  •  exercises a degree of control similar to that which it would have over one of its own departments (the “control” test); and
  • the service provider carries out the essential part of its business with the owner contracting authority/ies (the “function” test).

The Court of Appeal in 2009 upheld RMPs claim that the Teckal exemption did not apply, on the grounds that the necessary degree of control was not established.

However, the Supreme Court has overturned the decision of the lower courts. The key points were:

  • that there was always the possibility of 75% of the local authorities “directing” the company via the special resolution procedure.
  • the fact that a local authority could not vote in relation to discussion of its own insurance claim did not automatically signify that that local authority did not have the necessary degree of control, in the round and jointly with the other local authority shareholders; and
  • the fact that there were two independent directors was not fatal to the control test either, particularly as this is now a requirement of the FSA.

The purpose of the procurement rules, it said, is to preserve competition and prevent unfair discrimination against bidders. Contracting Authorities can choose to do work in-house if they choose to do so. Genuine cooperation is allowed.




In the 1970s Boston Consulting Group developed The BCG Box as a method for assessing the value of investments in a company’s portfolio.

Cash Cows

High market share but low growth rate. They don’t cost much but yield high returns. Companies should milk them for all they are worth!


High market share and high growth rate but devour money. The aim is to convert stars into cash cows. Invest wisely!

Question Marks

High growth potential but a low share of the market. In the right circumstances, they can be turned into stars. It’s a tough decision on growing this quadrant!


Business units with a low share in a saturated market. Dogs should be held onto only if they have a value other than a financial one. e.g. vanity project!

Consider supplier perception and where you sit on the BCG box. Useful questions to ask, are you part of their top 10 suppliers or are you viewed as a low-income client but strategically important to be linked with?

BCG reckons one of the biggest challenges in procurement is working with a supplier that has no competitors. How can you beat an unbeatable supplier to remain competitive and reduce your procurement costs?

Use contract management to improve the supplier relationship. How can you get a win-win situation, no one stays on top forever, there may be no competition now but that doesn’t mean it will always remain that way.  Reason with the supplier to level the playing field.

Try decoupling or seeking new arrangements. If the supplier feels like they have a monopoly and treat you unfairly, try altering the demand by reducing volume, going elsewhere where you can or become a bigger customer by joining a consortium or buying group to become their No.1 customer. (or as close as possible)

Give smaller players a chance and develop the market to increase competition


RFI Creative Agency

Note the content below is copyright by IPA and is added here to help users if they need an RFI template for creative services.


                                                                                                     REQUEST FOR INFORMATION

[Insert organisation name]


Reference:  xxx



Standardising RFI documents – a joint initiative




Agencies spend considerable time completing RFI (Request for Information) documents when pitching for new client business, each RFI being in a different format but mostly requiring similar levels of information. Clients (advertisers/marketers) often have no starting point for development of RFI documents, hence the large number of different formats in evidence and frequently seek guidance/or advice from ISBA on the type of questions to include.


Consequently the main trade bodies representing both clients and agencies in the UK (ISBA, IPA, DMA, MCCA and PRCA) decided to collaborate and help the industry by creating a jointly endorsed RFI template that would be a good starting point for clients and a recognisable standard form for agencies to respond to.

The main objective for the template is to reduce the time spent by clients and agencies alike in creating and completing RFI documents, allowing more time to focus on subsequent stages of any selection process.

All parties recognised that the ever growing complexity of communications needs and hence the agency market place has resulted in the imperative for a more flexible RFI, something which can be easily adapted to tailor a specific advertisers business requirements. We have therefore made this template available in a word format so that it can be amended where/when appropriate, but keeping to a standard format.

In the next section there are more detailed instructions on how to best make use of this RFI document.

All parties commend this new standard RFI.

It is anticipated that the content will be reviewed annually for relevance. If you have any comments on the template please feedback those comments to your relevant association (contact details below).

ISBA                                                     IPA                                                       DMA

Langham House                                    44 Belgrave Square                               DMA House

1b Portland Place                                  London                                                 70 Margaret Street

London                                                 SW1X 8QS                                           London

T: 020 7291 9020                                   T. 020 7235 7020                                   W1W 8SS

F: 020 7291 9030                                   F. 020 7245 9904                                   T. 020 7291 3300

http://www.isba.org.uk                           http://www.ipa.co.uk                              F. 020 7323 4426



MCCA                                                   PRCA

4 New Quebec Street                                           Willow House
London                                     1st Floor

W1H 7RF                                                              17-23 Willow Place

  1. 020 7535 3550 London
    F. 020 7535 3551 SW1P 1JH

http://www.mcca.org.uk                         T. 020 7233 6026

  1. 020 7828 4797



Instructions and Background


Before sending this RFI to your selected agencies you will need to provide some brief background on why you are reviewing and the scope of the business to ensure that you get pertinent information returned by the agencies, please find and complete the sections listed below. 

Background details to be completed by the client for this RFI  

  • Background on the scope of this RFI e.g. why you are reviewing, the type of agency you are looking to appoint
  • Objectives – what are you looking to achieve through the process
  • Scope of work e.g. Creative services, DM, Digital, PR or Media
  • Regions covered e.g. UK only, Pan-Europe, Global, EMEA
  • conflicts: List the specific competitor brands that would preclude associated agencies from this RFI
  • Budgets for this business (£) with as much context as possible i.e. including/excluding media, production etc
  • Timings: when to have this RFI completed by, client contact name, what are the next steps e.g. chemistry meetings, pitch date etc.

Additionally you (the client) are also required to complete some of the areas within the RFI document see front page and page 5 highlighted in Yellow. Once complete do not forget to remove the colour coding before passing on to the agencies.

Name of organisation


Registered address


Website address


Contact name
(Name & job title of person handling this RFI for the Agency)


Telephone number/mobile number (inc International/National code)


Email address


Fax number (inc International/National code)


Principle Office Address
(If different to registered address)


Companies House registration number


Year of registration



Please explain in full details of ownership of agency & affiliations
Where do you have offices that are relevant to this opportunity (see client brief)

What are your core business competencies?
(Brief statement of what your organisation does – 100 words max)





3.  FINANCIAL INFORMATION (Published Accounts)
TURNOVER AND PROFIT Year ending in 200_ Year ending in 200_ Year ending in 200_


£ £ £
Operating Profit


£ £ £
Additional notes or explanation of accounts


Please state if you cannot supply the above financial information as a result of the US Sarbanes-Oxley Act.
If you cannot supply the above financial information, Please provide us with other indications of financial health and scale (i.e. bank statement, parent company letter of comfort etc)  
What is your organisation’s preferred structure / method of remuneration?
(E.g. project v’s retainer, payment by results, mark up, etc.)


What currency does your agency trade in?  





Please confirm the financial cap per claim of your agency’s Professional Indemnity Insurance?      
Are you a member of any trade bodies?

(Please state which ones))


Do you have any of the following policies? (Answer Y  or N for each)



Quality Management    
Disaster Recovery    
Equality and Diversity    
Social and Corporate Responsibility    
Health and Safety















  Other (list)

















Please feel free to add any of the above policies as appendices to your submission



WARNING: Only divulge information with the expressed consent of the client, or information not covered by confidentiality agreements with clients.



CLIENT PROFILE                           Client Name YEARS HELD
Please list your top five clients.
(And give the number of years you’ve held the account)



Please give brief details of what you do on each piece of business by discipline.
(E.g. business to consumer, business to business, integrated, advertising, direct marketing, digital, media, PR, etc.)


Client 2:
Client 3:
Client 4:
Client 5:
Do you currently or have you ever provided any services to (Insert Brand Name)? If so please describe the products/services offered  


Please show how the following industry disciplines split as a percentage of your annual income (please provide estimates only) for all of the following:


Advertising (brand)     Design  
TV %   Corporate %
Cinema %   Packaging %
Radio %   Retail %
Outdoor %   Graphic %
Press %   Branding %
Online %      
Ambient %      
Direct Marketing/Integrated     Media  
Direct mail %   Planning  
TV %   TV %
Radio %   Print %
Press %   Outdoor %
Door drops %   Digital %
Inserts %   Buying  
Sales promotion %   TV %
POS %   Print %
Affinity marketing %   Outdoor %
Field marketing %   Digital %
Telemarketing %      
E-marketing %      
Database Marketing %      
Live Brand Experience %      
Digital     PR  
Email %   Corporate %
Mobile %   Consumer %
Online advertising %   Events %
Social media %   Experiential %
Viral %   Trade %
Web design %   Crisis %
Web build %   Celebrity %
Search %   Lobbying/Public Affairs %
Affiliate networks %   B2B/Trade %


Please detail the current mix of business as a percentage of your annual turnover.
Business to Business                 %
Business to Consumer                 %
Not for profit                 %
Total               100%
Do you subcontract work to 3rd parties?  If so, please give details here:


Please list any account wins or losses in the last 12 months .




WARNING: Only divulge information with the expressed consent of the employee.


Agency Experience

Please detail any recent (last 3 years) sector experience or Target Audience experience that is relevant to this brief e.g. client and brief description of the work undertaken for each brand.

(50 words per client)
(When did you work with them)
Key People Experience
(50 words per client)



Please complete the Non Disclosure Agreement attached at Appendix A

Please provide any additional information to support your submission





Kraljic Matrix & Supplier Relationship Management

In this article, I will review the original HBR  Purchasing must become supply management written by Peter Kraljic in 1983

In 1983 kraljic write that purchasing (as it was known then and not procurement) was carrying out activities routinely. These days we call it tactical purchasing. Do we negotiate with our suppliers and our established network in the same way? How much has really changed since 1983?

Purchasing has evolved to become procurement but we most definitely do carry out supplier relationship management or contract management.

It is more important than ever to have a relationship with our key suppliers because the world of work has changed a lot since 1983. We have globalisation and the emergence of IT changing the supply markets and intensifying a competitive landscape. Today’s top company can become redundant if they are slow to embrace change and a new company can become the next big brand upsetting more traditional and established companies.

As part of the supplier relationship management have you implemented actions to answer questions in the original article?

  • How do you safeguard against disruption in the supply change and cope with changing currency fluctuations and opportunities brought on by new technologies
  • Do your top suppliers operate a supply chain, if yes do you understand what the steps are including the risks, of parts of the supply chain fails?
  • Are your suppliers innovating to reduce cost?

Does your company require a supply strategy in the first place?

  1. The importance of the product
  2. The complexity of the supply market

Drawing below from HBR article linked above

Exhibit I Stages of Purchasing Sophistication

  1. Are you working with key suppliers to make use of opportunities? Even if your organisation operates a centralised procurement or purchasing function, some suppliers can work directly with different stakeholders. Work with your supplier to understand all contracts they have and consolidate them into one master contract and leverage the buying clout to get better pricing or value add. Also, review the supplier’s ability to supply and look at category options by bundling similar requirements into a single contract when it makes sense.
  2. Work with your suppliers to identify any expected supply bottlenecks and potential disruption before it becomes a real problem.
  3. Build a risk register for all of your key suppliers, what happens if they fail.
  4. Contracts shouldn’t be evergreen but should some contracts be for a longer period than the default period of 4 years if there are bigger savings to be made because of longer term commitment.
  5. How do you determine if  a make or buy policy is the best option
  6. Are there options to work with suppliers or even competitors to maximise return on investment
  7. Is your accounting system supporting the correct classification to enable you to pull off accurate spend reports? If not what can be done to complete a data cleansing exercise? Without knowing what volumes are purchased it makes it difficult to negotiate with clarity.

Exhibit II: Strategic (high-profit impact, high supply risk), bottleneck (low-profit impact, high supply risk), leverage (high-profit impact, low supply risk), and noncritical (low-profit impact, low supply risk).

Exhibit II Classifying Purchasing Materials Requirements


Strategic suppliers use analytic techniques, including market analysis, risk analysis, computer simulation and optimization models, price forecasting, and various other kinds of microeconomic analysis.

Bottleneck suppliers use specific market analysis and decision models for resolution, work with vendor for value analysis, price forecasting models and leverage materials.

Noncritical items focus less time on supplier relationship but make sure the contract is ticking over unless the spend is a non-critical but high value or high risk.

Remember to monitor or quadrants of the supplier positioning within the Kraljic Matrix because supplier positions might move to different quadrants over time due to shifts in supply and demand.

What is the supplier power?


(see Exhibit III).

Exhibit III Purchasing Portfolio Evaluation Criteria

Consider the supplier break even point. A supplier that has a lower percentage threshold at 70 % capacity has more room to negotiate compared to someone who breaks even at 80% utilisation.

If the supplier has a unique product review new entrants to the market as competition will follow if others can make or offer the same product or deliverable for cheaper.

 Strategic Positioning

Where are you in a position of strength and weakness?

(see Exhibit IV).

Map out your key suppliers and assess the supply risks. Use your strength to push for more out of supplier relationships as their key client. Where you are weak, diversify.

Exhibit IV The Purchasing Portfolio Matrix

On items where the company plays a dominant market role and suppliers’ strength is rated medium or low, a reasonably aggressive strategy (“exploit”) is indicated. Because the supply risk is slight, the company has a better chance of achieving a positive profit contribution through favorable pricing and contract agreements. Even so, it has to take care not to exploit the advantage so aggressively that it jeopardizes long-term supplier relationships or provokes counterreactions by insisting on rock-bottom prices in times of market discontinuity.

On items where the company’s role in the supply market is secondary and suppliers are strong, the company must go on the defensive and start looking for material substitutes or new suppliers (“diversify”). It may have to increase spending on market research or supplier relations or even consider backward integration through major investments in R&D or production capacities. In short, the company needs its supply options.

For supply items with neither major visible risks nor major benefits, a defensive posture would be over-conservative and costly. On the other hand, undue aggressiveness could damage supplier relations and lead to retaliation. In this case, a company should pursue a well-balanced intermediate strategy (“balance”).

Usually, a company will find itself in different roles with respect to different items and suppliers. When it can bargain from a position of strength, it should press for preferential treatment. Bargaining from weakness, the company may have to offer inducements—longer-term contract obligations, for example, or higher prices—in order to ensure an adequate supply.

Action Plans

Each of the three strategic thrusts has distinctive implications for the individual elements of the purchasing strategy, such as volume, price, supplier selection, material substitution, inventory policy, and so on (see Exhibit V).

Exhibit V Strategic Implications of Purchasing Portfolio Positioning


Alignment with business objectives

Procurement can only hold the purse strings of an organisation if it’s set up correctly. An organisation may prefer a centralised or decentralised function and most often the best is to have a hybrid of both.

The organisation needs to decide whether if it wants purchasing clout or flexibility. Procurement professionals who understand the need for flexibility and who have the gravitas to get buy in to lead large centralised contracts get the best of both worlds. It’s a tricky set up to navigate but if done well reaps enormous rewards.

If you can get the buy-in from your internal stakeholders apply, work with external suppliers to understand where they believe they fit in.

You might also like Kralijic Matrix  or a premium Kraljic Matrix in PowerPoint


IT Warranty Why Include In A Software Contract?

Do you buy IT occasionally and want to know how a Warranty works?

It is one of the most important contract provisions in a software contract. The warranty section deals with the performance of the software and what the licensor promises the software will or will not do. In a software contract, these performance warranties should be heavily negotiated, but usually, they are overlooked. Because so many factors can affect the performance of the software, publishers seek to limit their warranty and provide limited remedies in the event of a breach. It’s important for businesses who license software to have a strategy in place to successfully negotiate this section. But, what exactly are the pitfalls when negotiating a warranty provision, and how do you successfully navigate it?

One of the major pitfalls in negotiating a warranty is contained in the structure of the contract provision itself and the intent of the software licensor. Many contracts include boilerplate language, thus, contract negotiators must develop a systematic way to review the language and then develop a strategy to address the warranty concerns for their side of the deal. To do this, the parties must first understand the risks involved with a particular software license and negotiate for the specific risk type.

The best way to put this into action is to review the  terms and put the language into more concrete roadmap to negotiate the contract by asking the following questions: (1) what are the licensor’s objectives in the warranty section, (2) what are licensee’s objectives in the warranty section, (3) what is a checklist of provisions that should be negotiated in a warranty section, and (4) what is a general checklist of provisions that should be included in a warranty section.

Licensor’s objectives:

Licensors typically want to limit what they promise in their warranties as much as possible, and some limit their warranties to the most restrictive warranty possible, which is an “as-is” warranty – – “The Software is provided “as-is” without any warranties”. This type of warranty should never be accepted, and a warranty like this should always be negotiated for greater protections and promises that the software and services will perform.

Licensee’s objectives:

At the very least, the licensee’s objective in the warranty section should be the following warranties:

  • Title: That the licensor owns the software or, at least, has a license to use it.
  • Performance: Simply, that the software will work.
  • Virus: That the software does not contain any harmful code.

However, there are risks in seeking the bare minimum warranties listed above. When most licensees see these general warranties, they usually do not negotiate more than what is listed here. Remember, the warranty section is the contract provision dealing with how the software will perform and how the services will be performed. These are very important concepts because a whole host of things can go wrong (e.g., there could be errors, down time, or failure to perform, etc.).

Additionally, licensees must realise that software is an integral part of how a company does business. If the software does not perform in the way the licensee expects or wants, then it can have detrimental effects to the bottom line of the business. Therefore, there must be a systematic checklist that a licensee can review to make sure they are negotiating the warranty section correctly. The following is a list of questions that should be answered by a licensee who is negotiating the warranty section.

Checklist of questions that should be asked when negotiating:

  1.  Clearly state the standard to which the vendor is subject (e.g., “free from material defects”; “performs substantially in accordance with end user documentation” for software)?
  2.  Specify the time period within which the customer must notify the vendor of any warranty claims?
  3. Include appropriate exclusions (e.g., exclusions for software errors which cannot be reproduced, which occur in an unsupported hardware and system software environment, or which has been modified by the customer or any third party)?
  4. Include appropriate conditions precedent to the vendor’s obligation to provide a remedy for failure of performance (e.g., a requirement that the vendor be able to reproduce the error or demonstrate the occurrence or a statement of the costs the customer will be required to bear for fixing the issue)?
  5.  Sole and exclusive remedies for breach of warranty (e.g., such as “the exclusive remedy for breach of warranty is to fix or repair the software”)?
  6. Consider an alternate exclusive remedy in the event the first remedy fails of its essential purpose (e.g., “refund of the purchase price”)?
  7. Typically in a limited warranty section, does the Agreement contain a conspicuous disclaimer of the implied warranty of merchantability and does it also disclaim the implied warranty of fitness for a particular purpose, the title, or a warranty of non-infringement?
  8. Has the licensor has taken the necessary precautions to excluded viruses?
  9. Are the limitations of liability set forth in a separate section of the agreement?
  10. Does the agreement contain an acknowledgement by the customer that the purchase price or license fee reflects the negotiated provisions?

Provisions that should be included:

Based on the answers to the questions above, the sections should include some of the following warranties:

  • Licensor warrants that the Software shall substantially conform to the Functional Specifications.
  • The software or service provider has the necessary equipment and trained personnel to perform the services consistent with industry standards.
  • The software will be free of material or hidden defects.
  • The services will be performed in a workmanlike manner.
  • The services will be performed in accordance with industry standards.
  • The software or service provider will comply with all applicable laws.
  • The software or service provider warrants that it maintains an information security process with physical safeguards appropriate for the sensitivity of customer information.
  •  Time period, such as thirty (30) to sixty (60) days.
  • *This is not an exhaustive list

Remember, the contractual promises on how the software or services will perform. It is always important to seek advice from experienced legal counsel in order to understand all the risks involved when negotiating software and service contracts.