Digitising Contract Management; The Next Generation of IT Tools, Embedding Procurement Excellence
If recent events have taught us anything, it has highlighted the interconnectedness of global supply chains and our reliance on commercial agreements with key suppliers.
The COVID-19 pandemic and the UK’s decision to leave the EU have thrown commercial relationships with suppliers into turmoil and refocused attention on supply chain risk. A robust Contract Management approach has become even more essential than ever before.
Contract Management is the process of efficiently overseeing a contract’s lifecycle. From its creation and execution through to its renewal, it is vital to ensure that a contract is well managed and the supplier’s commercial performance against the contract terms are measured appropriately. Securing a commercial relationship with strategic partners and having a clear oversight of contractual terms across the supply base is vital for businesses wishing to emerge from this crisis in a much stronger position.
Contract Management; a core process of Procurement Excellence
The pressure of achieving procurement targets, as well as keeping up to date with new legislation and policies means that it is often difficult to identify who is liable for an issue when something occurs. This is where Contract Management can ensure that both parties of a contract are protected and that Key Performance Indicators (KPI) as well as Service Level Agreements (SLA) are upheld.
- Improved Business Decisions
- Better Commercial Understanding
- Improved ROI and Financial Optimisation
- Reduction of Risk
- Increased Supplier Collaboration
- Reduced Supply Chain Vulnerability
Contract Management, in its most simple form, is vitally important as it clearly outlines the business relationship and scope of work between the contracted parties. Whilst this would be regarded as basic procurement practice by many supply chain professionals, the pandemic highlighted just how few formal contracts actually exist and the lack of liability understanding, such as force majeure clauses, for when the unimaginable happens.
CPO, global manufacturing client
When Covid-19 hit, we didn’t know how many contracts we had, let alone, how many had a force majeure clause we could use.
Contract Management has traditionally been undeveloped and under-leveraged by organisations. According to a recent survey, almost half (49%) of firms globally will overhaul their entire digital procurement and supply chain strategies in the wake of the COVID crisis, however 63% of executives from the 400 organisations questioned only score themselves as 4.8 out of 10 ready for digital adaptation.*
A recent Dun & Bradstreet study estimated that 163 of the Fortune 1000 have Tier 1 suppliers (those that they do direct business with) in Wuhan, China whilst 938 have one or more Tier 2 suppliers (which feed their first tier) in the same impacted area*. This demonstrates not only the importance of having full visibility across all tiers of the supply chain, but also an in-depth understanding of the legal relationship with critical suppliers.
Contract Management is going digital and embedding the benefits is straightforward
Contract Management has historically been a poorly executed, manual process with very little digital application. In some cases, best-practice is considered to be scanning a signed PDF copy to your computer following contract completion! However, a new wave of digital tools have arrived into the digital procurement solutions market. Along with the well-known and trusted ERP players, there are now numerous new entrants and tech players that have invested heavily in developing their Contract Management tool offerings.
Our solutions database has more than 40 solution providers. The market now provides a huge choice.
Contract Lifecycle Management
Along with developing centralised contract repositories, which provide increased commercial visibility, significant advances in AI now allow for key word or term searches as well as cross-functional workflow tracking and status reporting. Gone are the days of manually red-lining and trying to track multiple contract revisions! Digital Contract Management enables you to automate the complete process, allowing for simplistic tracking, increased governance, renewal deadline reminders and a completely auditable management approach for all contracts.
How can digital Contract Management benefit your organisation?
Digitisation is the most effective way to embed and ensure a process improvement is sustainable. Digitising contract management provides for;
- Transparency of commercial information
- Quick and easy cloud-based access
- Rapid multi-level authorisation permission management with tier-level security
- Centralised repository with collaborative workflows
- Enhanced security
- ERP integration opportunities
- AI enhanced functionality
A new wave of tech solutions has brought down the cost of digital Contract Management
Most digital solutions within the market offer both off-the-shelf and customisable Contract Management services which mean that they are quick and easy to set up. Implementation can be completed in as little as 4 weeks, depending on the number of procurement contracts within the business and the level of customised functionality that you are seeking. Many of the tools are extremely intuitive and user friendly, so the entire procurement team can be reaping the benefits of an automated Contract Management system very quickly.
It is a common misconception that these digital Contract Management tools are expensive. With technical advancements and a dramatic increase in the number of players within the market, these tools are now very competitively priced, meaning that they are much more affordable, regardless of your businesses size. In addition, the initial implementation costs are quickly outweighed by the benefits of time and efficiency savings that can hit your bottom line from day 1.
Procura optimises selection and rapid implementation
Procura helps clients find, select and rapidly implement Contract Management tools, embedding a backbone process of Procurement Excellence.
We help clients to define their requirements. Understanding the current situation and the target operating process are fundamental in selecting the right solution.
We help clients select the right solution from a complicated market-place.
And, we implement. Rapidly delivering Procurement Excellence.
If you are considering how digital Contract Management can help transform your procurement operation, we’d love to talk.
Email us: firstname.lastname@example.org
Call us: +44 (0)203 693 7275