Supply Chain Resilience Through Innovative Contract Establishment

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As the pandemic and other external risks have emerged during the past year, many commercial contracting professionals are re-assessing and re-formulating their supply chain strategies.  For many, simply maintaining the status quo is the greatest risk.

With commercial contracts and relationships, most strategies and tactics require review and varying degrees of change.  This session will address the contracting elements needed to support a resilient supply chain and how the commercial contracting professional must become an enabler of change. 

Learning Objectives:

  • Understand the optimal contracting models and language you should have in place
  • Learn to foster an enterprise culture which catalyzes innovation
  • Gain insight into building commercial relationships which will treat VUCA (Volatility, Uncertainty, Complexity, Ambiguity) as an opportunity rather than a threat
  • Learn how to equip your team with the necessary skills
  • Gain techniques for filling your commercial toolbox with more than contracts
  • Craft a strategy which benefits one's supply chain and not merely oneself

Join Jim for what promises to be a thought-provoking and insightful session!

Level: Basic
Format: Group Internet Based
Instructional Method: QAS Self-Study (Traditional)
NASBA Field of Study: Management Services (2 hours)
Program Prerequisites: None
Advance Preparation: No
  1. Introduction
  2. What is Resilience? 00:01:53
  3. What Does a Contract Do For Us? 00:04:48
  4. What Does a Contract Do For Us? (cont’d) 00:06:40
  5. Foresight Cannot Rely On Luck Or Chance 00:09:14
  6. Foresight Cannot Rely On Luck Or Chance - Contracting Practices 00:10:09
  7. Foresight Cannot RelyOn Luck Or Chance 00:12:30
  8. There Needs To Be Incentive 00:20:03
  9. Which Of The Following Is Central To This 00:25:28
  10. Foresight Cannot RelyOn Luck Or Chance - Essential Elements 00:30:34
  11. What Is Your Commercial Contracting Strategy To Ensure Resilience? 00:31:50
  12. What Is Your Commercial Contracting Strategy To Ensure Resilience? - Local Vs Global 00:38:32
  13. What Is Your Commercial Contracting Strategy To Ensure Resilience? - Trend Pie Graph 00:41:48
  14. Strategy Success - Components 00:52:25
  15. Focusing On The Contractual Documents - Contracting Models  00:52:41
  16. Focusing On The Contractual Documents - Risk Clauses 00:58:16
  17. Focusing On The Contractual Documents -Collaborative Orientation 01:05:38
  18. Force Majeure Sample Clause 01:06:31
  19. Do Not Use Contracts To: 01:12:35
  20. Patrol Boat Enterprise Charter 01:13:40
  21. Strategy Success - Components 01:18:14
  22. Strategy Success - Components  - Steps Forward 01:20:01
  23. Strategy Success - Components  - What is Win-Win? 01:24:57
  24. Strategy Success - Components  - Automobile Manufacturers and Suppliers 01:27:24
  25. Strategy Success - Components  - Competitive Bidding 01:30:02
  26. Strategy Success - Components  - Build Commercial Relationships 01:30:30
  27. Commercial Relationships = Collaboration 01:31:01
  28. Commercial Relationships = Collaboration - Workforce Engagement 01:33:13
  29. Top Ten Skills 01:35:00
  30. Strategy Success - Components  - Your Skills Toolbox  01:35:52
  31. What Might One Add To a Contracting Toolbox? - Supply Chain Resilience Strategies 01:35:58
  32. What Might One Add To a Contracting Toolbox? - Regional Charters 01:36:31
  33. Strategy Success - Components  - 01:36:57
  34. Attendee Questions 01:37:20
  35. Presentation Closing 01:41:03

  • Jim Bergman

    Jim Bergman

    Jim is an experienced contracts attorney and procurement professional with international management consulting experience in the procurement field in the USA, UK, Europe, China, India, SE Asia, the Middle East, Africa and Australia. He has experience working in both the public and private sector on [...]

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ISM Credit

Institute of Supply Management

This program may be used for Continuing Education Hours (CEH) toward recertification for programs offered by the Institute for Supply Management®, including the Certified Professional in Supply Management® and Certified Professional in Supplier Diversity®.

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  • Contract 00:04:47, 00:47:31, 01:12:39
  • De-verticalization 00:46:01
  • Key Performance Indicator (KPI) 00:57:24, 01:36:29
  • Risk Allocation 00:23:15
  • Risk Mitigation 00:23:19
  • Supply Chain 00:02:21, 00:07:09, 00:18:52, 00:42:48

Contract: A written or spoken agreement, especially one concerning employment, sales, or tenancy, that is intended to be enforceable by law.

De-verticalization: De-verticalization is the process of separating functions and services from a vertically integrated business.

Key Performance Indicator (KPI) : A Key Performance Indicator is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs at multiple levels to evaluate their success at reaching targets.

Risk Allocation: Risk allocation is the process of identifying risk and determining how and to what extent they should be shared. Most owners understand that risk is an inherent part of the construction process and cannot be eliminated.

Risk Mitigation: Risk mitigation involves taking action to reduce an organization's exposure to potential risks and reduce the likelihood that those risks will happen again.

Supply Chain: A supply chain is a network between a company and its suppliers to produce and distribute a specific product to the final buyer. The supply chain also represents the steps it takes to get the product or service from its original state to the customer.

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Frequently Asked Questions

Supply chain resilience is an organization's ability to anticipate, prepare for, and adapt to disruptions — from pandemics to geopolitical events — in ways that preserve operational continuity and competitive position. Commercial contracts are central to resilience because they define the rights, obligations, incentives, and risk allocations between supply chain partners during both normal operations and disruptive events. Contracts designed for stable, predictable environments often fail when VUCA conditions — Volatility, Uncertainty, Complexity, and Ambiguity — are encountered, because their risk allocation was built around assumptions that no longer hold. Resilient supply chains require contracts that address disruption scenarios explicitly, create incentive structures aligning partner behavior with resilience goals, establish clear communication and escalation protocols, and preserve relationships under stress rather than triggering adversarial responses that compound disruption.
Building supply chain resilience through contracts requires moving beyond boilerplate commercial language toward purpose-built provisions that address specific risks and opportunities. Essential elements include well-crafted force majeure clauses defining what constitutes an excusing event and what obligations remain in force, risk allocation provisions distributing performance and financial risk in ways reflecting each party's ability to manage it, performance incentive structures that reward resilience-building behavior, collaborative governance mechanisms creating forums for joint problem-solving during disruptions, and communication protocols ensuring information sharing when conditions change. Contracting models that move beyond purely transactional frameworks — such as relational contracting and outcome-based agreements — often support greater resilience by aligning partner incentives around shared success rather than adversarial position protection during inevitable supply chain disruptions.
VUCA stands for Volatility, Uncertainty, Complexity, and Ambiguity — a framework describing the challenging conditions increasingly common in global supply chains. Volatility refers to the speed and magnitude of change; uncertainty to the lack of predictable outcomes; complexity to the multiplicity of interconnected variables; and ambiguity to the absence of clear cause-and-effect relationships. For procurement and contracting professionals, treating VUCA as a permanent feature rather than a temporary aberration requires fundamental changes in approach. Resilient contracting strategies build optionality, flexibility, and collaborative relationships into commercial structures rather than optimizing purely for cost under stable conditions. Organizations that view VUCA as an opportunity to differentiate through supply chain agility — rather than simply a threat to manage — are better positioned for sustained competitive advantage in increasingly volatile global markets.
A force majeure clause excuses a party from contractual performance obligations when extraordinary events beyond their reasonable control make performance impossible. Traditional force majeure language listed specific events — natural disasters, war — designed for rare, clearly defined disruptions. Modern supply chain resilience requires language addressing broader categories including global health emergencies, government-mandated supply restrictions, and cyber incidents. A well-structured force majeure clause should specify what notice obligations are triggered, what alternative performance obligations remain even when primary obligations are excused, what information-sharing and mitigation duties arise, and how the parties will resume normal performance when conditions improve. Force majeure that excuses performance without creating alternative obligation structures can actually reduce resilience by allowing parties to disengage precisely when collaboration is most needed — the opposite of what resilient contract design should achieve.
Win-win commercial relationships built on aligned incentives, transparent communication, and mutual investment in each other's success are among the most durable forms of supply chain resilience available. When supply disruptions occur, partners who have built genuine trust respond differently than those with purely transactional history: they communicate problems sooner, work jointly on solutions rather than protecting individual position, and prioritize relationship partners over spot-market alternatives. Building win-win relationships requires moving beyond competitive negotiation toward contracting practices that create value for both parties — sharing forward-looking information that enables better supplier planning, providing predictable volume commitments that justify supplier investment, and involving key suppliers in innovation and problem-solving rather than treating them as interchangeable vendors to be managed at arm's length. The commercial relationship itself becomes a strategic resilience asset.