In standard contract models Risk is connected to Reward; “if Risk is reduced so is the potential Reward, to maximise the Reward needs Risk to be increased”. Markets are becoming increasingly more volatile and as organisations focus on reducing risks further, it is to the detriment of the organisations profits/budgets.
At POD Procurement we believed “there had to be a better way” and we set out with the intention to re-invent the way we address Risk and Reward within a contract. We wanted to create a solution that would support all of the following at the same time:
• Reduce post-contractual Risk for both parties
• Increase contractual Flexibility for the buyer
• Increase Rewards for both parties
• The solution must be scalable and practical for both parties
After two years of R&D, our efforts were rewarded with the creation of a new commercial model called “The POD Model”.
Rather than focus on risk to the detriment of reward, The POD Model enables organisations to focus on reducing risk whilst maximising their potential rewards. The POD Model is specifically designed for 21st century dynamic markets, enabling organisations to not only survive market changes but capitalise on opportunities it creates.
By ensuring the outcome is beneficial to both buyers and suppliers, it enables the model to be pro-actively used as a value proposition by sales or as a procurement model with the supply chain.
Benefits of The POD Model include:
1. Financial Value:
a. Improved Savings whilst supporting a Sustainable Supply Chain
b. Increased Revenue and Profits
c. Increased Business Efficiencies
d. Reduced Business Costs
2. Social Value: maximising self-investment opportunities for the supply chain.
3. Environmental value: reducing commercial waste and excess stock
Not only has The POD Model achieved financial, social and environmental value, it is also a catalyst for cultural change. It enables organisations to transcend from the transactional relationships we have today where many are based on confrontation and mistrust, to partnerships based on transparency, collaboration and mutual benefit. To achieve this outcome required Risk and Reward to be treated as complimentary components that are associated but independent, and where benefits are mutually shared by both parties.
The POD Model is supported by the Chartered Institute of Purchasing and Supply (CIPS), the International Association of Contract and Commercial Management (IACCM) and is a published book with Cambridge Academia available on Amazon. POD procurement are proud to be partners with DPSS Consultants, utilising our collective skills for the benefit of our enhanced customer base.
The POD Model:
• Can be applied to public sector and private sector contracts
• Can be applied internationally
• Requires no new tools or technology
• Can be applied to standard contracts
The POD Model provides the capability for organisations to reduce their risks whilst maximising their reward potential, enabling the volatility in markets to be interpreted not as increased risk, but as new opportunities.
POD Procurement offers consulting on:
Getting Contracts to Talk the language of Business
A short training programme looking at the business value achieved from current contract models such as Committed Contracts, Uncommitted Contracts, Framework Agreements and Piggyback Contracts
A short training programme discussing the business value achieved from commercial models such as Fixed Price, Gain Shares, Benefit Sharing and Pre-agreed Pricing Models
The POD Model
Creating 21st Century B2B Commercial Contracts
If you would like to discuss further, please feel free to contact email@example.com