How to Get Ready for a Fortune 500 Contract
In past articles, we have discussed how to implement and control government contracts and avoid the worst mistakes in government contracting. However, managing contracts with Fortune 500 companies can be just as tricky and sometimes even more.
Here are 5 specific tips how to get your enterprise ready to handle the arduous contract lifecycle with large Fortune 500 companies.
1. Become a Preferred Supplier
When you want to play with a member of the Fortune 500 crowd, cold calling doesn’t work. Product managers and executives can only work with a select of group of pre-qualified vendors. An example of this system is Microsoft’s Vendor Program, which has gone through several iterations through the years. If you want to do business with a division from Microsoft, you would need to first become an approved preferred supplier and work your way up the chain to eventually upgrade your status to approved premier, if applicable.
The higher your clearance in the company’s preferred supplier list, the more access you have to bigger and better bids. For example, approved premier suppliers make up over 20% of Microsoft’s top supplier base.
2. Have a Dedicated Contract Lead
When you work with a Fortune 500 company, you often find that these companies can be very demanding. Having a dedicated contract lead is a good idea to keep a healthy relationship with demanding clients. While the Fortune 500 contract may not be your single contract, you need to make the company feel as it were. Not answering emails or returning calls in a timely manner doesn’t just rub managers the wrong way, it could be documented to build a case against the renewal of your preferred supplier status.
In highly structured vendor programs, efficiency, punctuality and thoroughness are key to to success. This is only possible through a dedicated contract lead and effective client management.
3. Keep an Eye for Special Certifications
Another reason to keep a dedicated contract lead for a Fortune 500 is the need to keep abreast changing requirements and special certifications. The lead does not only take care of the day-to-day logistics, but also is in charge of strategic thinking, which includes attending bid meetings, walk-thrus, and certification events. Large corporations with complex contract programs often provide assistance to women- and minority-owned business. Depending on certain characteristics, such as size, your business may be eligible for certifications that increase contract opportunities and level the play field against large preferred suppliers.
4. Invest in Enterprise Contract Management Software
Consider this fact: the typical Fortune 1000 company maintains between 20,000 to 40,000 active contracts, according to the Institute for Supply Management. This means that any manager in a Fortune 500 must feel overwhelmed on a daily basis at the sheer amount of data he or she needs to plow through. If you are using a paper-based contract management solution or a sub-par digital one, you are likely to have diminished contract visibility. Having advance search capabilities and knowing the who, what, where, when and why of every single contract is a must and that is only possible through an enterprise contract management solution.
Another reason to invest in appropriate contract management software is to keep the necessary audit trail for audit and compliance, such as for Sarbanes-Oxley compliance.
5. Keep a Portfolio of Subcontractors
As your company attends vendor events and interacts with more stakeholders, it will be presented with additional bid opportunities. This may include becoming a subcontractor for another supplier with a higher clearance or recruiting the help of a specialized subcontractor to meet a tighter than usual turnaround. Update your portfolio of subcontractors on a regular basis, so that your company is ready to take advantage of last-minute bids. Evaluate subcontractors carefully and avoid judging them on price alone.
Ideally, you want to build a long-term relationship so that you can work with this subcontractor on future projects, not just this one. Finally, develop a strategy to prevent any type of subcontracting squeeze, such as scope creep from customer or change order from subcontractor.