Contract Management

Hi!  I am new to working for a small company where in some cases of software, maintenance, and equipment purchases that we have to go through Resellers for those needs.  We have a few resellers that for a company our size we have significant amount of spend that goes through them.  Each purchase is different.  How do you document, control and mitigate risk with resellers and the goods/services you are purchasing through them.  IE: Maintenance for an IBM equipment, software for ITM DR, etc. After we makes these purchases any support in the event we have issues has to go through the OEM directly so they are basically just the pass through.  How are these resellers managed, the good/services managed, documented etc.  I would appreciate your feedback as this is new territory for me. 

Managing risks with resellers and the products or services they provide involves a comprehensive approach that includes documentation, control mechanisms, and mitigation strategies. Here are some steps you can take:

Due Diligence:

• Be sure to research and vet potential resellers prior to entering into any contractual agreement. Evaluate their financial health, audits and company reviews.
• Request references from other businesses that have used the reseller.

Contractual Agreements:

·       Clearly defined terms and conditions that should include scope/deliverables, service level standards, pricing/payment terms, liability limitations and penalties for non-compliance.

·       Consider clauses related to confidentiality/data security, disaster recovery, and dispute resolution to protect your interests.

Performance Metrics:

·       You will want to establish key performance indicators (KPIs) to measure the reseller's performance and have them written into the agreement. Typically, these would be things like timelines for deliverables, service level standards, and service credits if performance is less than expected.

·       Periodically review the reseller's performance against these metrics.

Regular Audits and Monitoring:

·       Your reseller should allow regular audits of their operations to ensure compliance with standards and contractual obligations.

·       Implement monitoring mechanisms to document the reseller's activities and identify any deviations from the agreed-upon terms.

Documentation:

·       Always document amendments or modifications that are made to the agreement and ensure that both parties agree to the changes.

Risk Identification:<

·       Identify potential risks associated with the reseller relationship, such as supply chain disruptions, quality issues, or financial instability.

Contingency Planning:

·       Have a contingency plan for the potential risks that include alternative suppliers, emergency communication protocols, or having backup plans for your critical services.

Communication:

·       Establish clear communication channels with the reseller in order to address any issues promptly.

You can build a risk management framework, by combining these measures that will help safeguard your interests when dealing with resellers. I hope this is helpful and would love to hear how others in the community mitigate risk with their reseller agreements.