Nick brings a unique perspective to the discussion of CLMs, having held different positions all throughout GM during his career so far. His broad understanding of the various departments makes him well-suited to help select the CLM tool the company will eventually adopt.
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0:00You're listening to the Contract Heroes podcast, your one-stop shop for all things contract management. And now here are your hosts, Marc and Pepe. So welcome again to the Contract Heroes. So in this episode, we have Nick Cheras from General Motors. Uh, Nick Cheras, uh, can you give us a just a brief in- in- introduction about yourself? Yeah, no, I appreciate you guys having me on the podcast, an awesome opportunity to partake in this summit. Um, so yeah, as mentioned, I work for General Motors. Um, I did graduate from Ohio State, um, with a degree in logistics and operations management, and then out of college I had the opportunity to join, um, GM's track rotational program. So depending on the organization, you do six month to one year rotations, up to three to four rotations. Um, so get to see multiple different areas of the business. So my- for myself, I was on the direct material, um, side of purchasing and procurement.
0:53Then I worked on a critical operations team, um, navigating through critical supply chain disruptions with our tier one, um, all the way to raw material suppliers, and then indirect material manufacturing. Um, and now I'm placed in my permanent role as an indirect materials buyer for the cutting tool space. So, uh, really great, got to see, you know, multiple areas of the GM business within a short period of time. So that's amazing. So Nick, tell us about your most recent award in the World Commerce and Contracted, the Leaders of the Future, what it's about. Yeah, really, really great opportunity. So the World Commerce and Contracting Committee has an annual competition, um, usually with, you know, uh, people that are under 30 in, you know, either legal, commercial, or kind of procurement positions. Um, and then they assign a prompt for you and your team to work and try to answer. And, and our prompt for 2022 was how to deliver strategic value under times of uncertainty, which is a really pressing issue, right, ever since the outbreak of COVID-19 and all these supply chain disruptions, um, that have been occurring. So, um, our team of, uh, three other people from respective, uh, North American companies got together and really tried to understand, you know, what do we see as delivering strategic value?
2:00And I think that was the biggest, um, complexity in the whole project itself, was trying to align on that, right? From, from my side, from GM, you know, strategic value to me is, is zero production disruption, right? So I would like to have supply chain visibility, um, and, you know, understanding all the way from the raw materials to our tiered supply base, right, where it's flowing through and what parts are impacted from certain disruptions. Um, but from a legal side, it's okay, how do we reduce, you know, all the pain points in negotiation after a contract's issued to make sure we've got flexible clauses in place? So really trying to balance that and, you know, from different companies, from product-based companies to service-based is, is really trying to understand that. Um, and we all really came to the agreeance of, of a contract management software tool as, as being that avenue, right? It, you know, from, from my side, it, it creates, uh, the flexibility in building the contracts, um, make stronger contracts. You're, you're more protected, right, from dis- disruptions when they occur, and your supply base is kind of aligned with those terms.
2:56Um, from the legal's perspective as well is, you know, it creates, makes sure you have legal sign-off on those terms that you're creating, right, and, and less work around for them, um, anytime there is a contract breach going forward. So it really kind of covered all areas of the business. So we aligned on that and, um, actually proposed a specific, um, contract management solution, but it was really just for contract management solutions in general and the value of, you know, the, um, savings, um, from reducing cycle time to, you know, produce contracts and all the friction points it reduces, you know, post-issuance. Um, and our team had the opportunity to present that material and actually won the Americas competition. Then we went to the global competition with Europe and, um, other continents, and we were able to win that as well. Wow. Wow, that's awesome. Yeah. Really, yeah. Very cool. Yeah. Very cool. And, and I think, you know, it's interesting that you were able to have different roles at GM, you know, going through, through that program that you went through and, and I think you got to see a unique perspective of po- about how contracts affect different parts of the organization.
3:57Yep. So I, I think, you know, Nick, it kind of gives you a u- unique perspective on what to look for when evaluating these, these CLM tools, which I think it sounds like, you know, the, the team has realized that they need. Um, so, you know, and I know we, we just, you know, mentioned, you did mention a couple of the, the key functions here, but what is your team specifically either looking for while you're going through this evaluation phase? What are the, the things that you really wanna make sure a system has before you move forward with them? Yeah, absolutely. I, I think the importance is to have front-end and back-end solutions to it. So when we talk about front-end, the contract management development, so actually developing the contract is, is having some key, you know, systems software that just kind of makes it easier to develop the contract, right? When, uh, when you're talking about, you know, formulating the terms and conditions, that highlights it for you and actually explain it into, you know, to a way that's understandable. Maybe, maybe legal understands all of that, but from a buyer perspective, you know, you really aren't in tune with it unless a supplier comes back to you and you have to reference a clause right when you need it.
4:58Um, so I think that's really important. And then, you know, as well is just its ability to reduce your cycle time. So instead of, you know, just trying to build something from scratch, is having some standard templates that will kind of, um, allow you to process and build a contract faster, right? And then two is making sure, you know, and the last part is, you know, having stakeholder sign-off on it too, right? That way it's not just, uh, email communication and making, you know, "Hey, I need, you know, legal sign-off. I need this stakeholder sign-off." Having it all done in the system makes sure that everyone who's supposed to be involved in the process is involved. Um, and then giving you that back-end visibility too. So once you issue the contract, right, it's not just hands-off understanding, okay, what are the trends I'm seeing with this contract, right? If in monitoring, basically measuring its, its successfulness, um, am I still getting a ton of, uh, you know, feedback or breaches in the contract, right? And if so, what areas? So you know, okay, hey, is this, is this clause not flexible enough? Is it even the right language that we should have in there? So having that data visualization visibility, um, is really useful and actionable.
6:01So that's nice. So, and how about how you've been applying all tho- that knowledge in any project in GM? Beca- I mean, because you, you've been in different, uh, departments- Yes... and, and how are you building that project of the, of the, w- with the visibility? Yeah, yeah. I, I'd say just the lesson for myself is to actually understand the contracts that I'm managing. I think, you know, when I first started, it was, "Okay, just get the best possible price," and then, you know, "Hey, we'll source this," and the contract will kind of, you know, be formulated in our ERP system and released. Um, so from my side it's, it's, it's really understanding. And it helps, you know, as, especially in GM as we're still navigating through these, you know, complex and constrained supply chains, is, is kind of leveraging the language that's in there, right? If, um, you know, what is our, what is our, you know, statement of requirements call out as far as product delivery and quality, and kind of leveraging that and making sure our supply base is, is really in tune with it too. Because, you know, it's one that if we know it, and it doesn't, it doesn't really matter if, if our tier ones, the recipients of it, don't understand it as well, so making sure they're aligned with that as well.
7:04So, you know, maybe while we don't have a set contract management system in place, I'm trying to make sure that, you know, I'm kind of understanding those, those aspects that a contract management system would otherwise highlight. And how are you calculating, like, costs or time savings? Yeah. So actually with our team, um, one of our team members, uh, Tom Pacer, worked for, um, Raytown, actually calculated, uh, something. I don't have it on hand, but it just, it kind of calculated the mon- the monetary amount for having delays in contracts, right? The revenue that you miss from not having a contract in place in time. So that's really what you get, yeah, that you miss out on, right? Is if you don't have those agreements in place yet, um, all the revenue that you could be bringing in, um, in that delta between when you have it, you know, in place. And have you, you know, as you've been going through these processes and you've been working with different teams, um, who, who's coming to the table to help you evaluate these systems? Are there different parts of the organization that you're working with to make sure that the tool kind of fits everybody's needs? Yeah.
8:02Um, right now we, we, we don't really have a development in place, so at, from my side there hasn't really been too much communication yet. But when it does occur, um, I, I know that it's gonna have to be a collaborative effort between both the stakeholders, right? Uh, our manufacturing facilities, our, our legal department, purchasing, right? And then also having input from our tier one suppliers. Um, really it's gonna take that holistic approach to make sure it's, it's cross-functionally aligned, right? Because something that might make sense for one stakeholder might be completely off for another. Um, so I think it's really gonna take the entire enterprise that I mentioned to, to kind of align on it. Right. And one, one, one of the things that we were just talking, uh, before we, we started with this, with these interviews is, of course, that other systems, right? Like trying to integrate it with ERP- Yeah... so that the procurement and legal can have the same flow of data there. Mm-hmm. Right? And, uh, so that part with the integration with other software, like how are you envisioning that? Yeah.
9:00And I'm kind of envisioning it in a phased approach. Obviously it w- it can't be siloed, right? The contract management system has to integrate with our ERP systems and make it useful or else, you know, no one's gonna touch it and it's just a- Yeah... a data visualization tool. But I think it needs to be a phased approach, especially when you talk about a company in volume of contracts, um, like General Motors. I think it kind of has to be a phased approach, so maybe there's some features that starts off with just procurement. Um, and then, you know, once they get comfortable with it, then it kind of rolls out to, you know, more, um, more downstream, right after the contract's issued. So I think it has to kind of be a phased approach so there's gonna be some comfortability and trust within the system. Or else, you know, if you just go with a, you know, a entire rollout with, with all areas of the business, then it becomes very hard to manage. And if we just kind of implement it without knowing what it does, then it creates, you know, that stigma of, of this was unsuccessful, right? So you gotta be really smart about it and kind of phase it in, uh, the different areas of the business, I think.
9:56And, and have you thought about, you know, trying to roll this out at, at different, um, locations, like globally? I- is there, are you gonna start at the headquarters or are, are you trying to do maybe, um, or differently, right? Where maybe you're working with a specific set of contracts to, to start the project. Yeah. And I, I think it could be commodity-specific. So I think about when we talk about, um, maybe by commodity at first, I think our indirect material space is pretty great because our direct side is, is a little more structured. That's how we talk about direct material and physical parts that are going onto our vehicle. So it's a, it's a little more set in their ways, where I think in our indirect material space you've got such a wide array from indirect material, but to actual services and, and products that don't go on the vehicle. So I think that kind of gives us the opportunity to be more flexible and integrate it, right? And then if it becomes tried and true, it's integrating into our direct material systems as well. So I think from a commodity standpoint it makes sense for, uh, maybe to go into our indirect material space, and then, yeah, from, from a site-by-site location, maybe just starting off with our US sites and then going out to, you know, GM North America, which include Canada and Mexico, and then maybe globally as well, that use the kind of same ERP system so we can take those lessons learned and, yeah, like we talked about, phased approach within the organizations, but we can take that same phased approach with commodity, um, and regionalized landscape.
11:11Yeah, that's cool. I think that that's a great approach, because you, you, you gotta do it in different phases. I mean, either if you do it, like, in the regions or with different kind of contracts, and I think that you already have, like, more than half of, of the work already done. Because you, you already have all the processes that, that you wanna do, what... And with that kind of information, now you can ask vendors, like, "Okay, I want to do this. Like, can you do it?" And, and, and that's the best way on how you can approach even implementers or consulting firms, because now you know exactly how are you going to evaluate, uh- Yeah... if, if any kind of, uh, software or implementer in is a, is a good match for, for your company. So, uh, that's great, Nick. Yeah, yeah. No, I think it's, I think it's important just to have some common sense to, you know, why we wanna do it in the first place, right? The, the, the value add to it, obviously. But then, yeah, understanding the, you know, okay, well what's, what's, what are the major roadblocks, right?
12:03And the integration of the key systems that we need to really map that out before it's just a, you know, decision of, "Hey, this is a good visualization tool. Let's go with it." Really has to be, you know, well thought out and understand, and then yeah, just have the common sense to why we're doing this, right? Right. Wow. All right. Well, Nick, this has been a great conversation. Uh, really happy you swung by, and I hope you have a, a blast at the rest of the conference. Yeah, no, thanks for having me, guys. Appreciate it. Yeah, sure thing. Appreciate it.