Are you focusing enough on contract management in your procurement process? Contract management with vendors or third-party suppliers involves contract creation, execution, and analysis. It helps businesses improve operational and financial performance, mitigate supply chain and supplier risks, ensure error-free transactions, maintain mutually beneficial relations with suppliers, resolve conflicts quickly, and much more.
However, businesses still rely heavily on spreadsheets, emails, or shared folders, making contract management inaccurate, cumbersome, slow, and error-prone.
If your contract management process is not efficient and well-defined, then you should take the next critical step of modernizing it. So, let us dive in!
Challenges Faced in Traditional Contract Management
You may have encountered many supply contract-related questions time and again for every procurement or purchase. This becomes especially critical as you would be receiving queries from other departments over the status or phase of each of their contracts.
For instance,
- Number of contracts for auto renewal this month?
- Contracts and associated payment terms?
- SLA status among internal stakeholders? Are stakeholders notified in real-time?
- Orders fulfilled against the supply contract or vendor agreement?
- Supplier relationships meeting the KPIs and performing well?
To be better equipped with this information to not only keep your team informed but also to take timely, profitable decisions, you need complete visibility and a deep understanding of supply chain processes, agreements, and supplier relationship management.
Moreover, whether you are a big enterprise or a small to medium-sized company, the procurement process is riddled with many challenges including
- Lack of standards and transparency in contract management
- Slow and error-prone processing/approvals in paper-based contracts
- Complex regulatory requirements
- Lack of communication and collaboration between suppliers and internal team
- Low level of automation or digitization in the entire sourcing and procurement process
What Can You Expect After Modernizing Contract Management
Digitization is transforming many business processes and when you adopt smart, cloud-based software to modernize your entire contract lifecycle management, you can expect significant changes but are not limited to the following.
You can access online, standardized forms for contract creation and submission. This will enable quick and easy workflow among the required stakeholders. Electronic signatures, as well as libraries for templates and clauses, make the management of workflows more transparent and streamlined including the composition, negotiation, and approval of supply contracts. Moreover, features such as data analysis helps you make better sense of your data.
You can also schedule your important alerts or notifications for the required stakeholders and maintain a central repository of all contracts and associated documents for everyone to access easily and quickly. Such softwares also allow you to configure customizable dashboards and contract management reports
Top 7 Reasons to Modernize Contract Management for Procurement and Purchasing
Here are some proven benefits of digitization of contract management.
#1 Streamline vendor management including SLA
You need to be able to assess the performance of your supplier relationship to improve contract management. Digitizing contract management will offer you end-to-end visibility structuring and storing your contract data at a secure, central repository. You will be able to, thus, make necessary changes, or additions and handle terminations. This will eventually enable you to oversee and manage the terms, important dates or information of your contract, get real-time updates on status of contract completion and status, optimize supplier relationship management, etc.
# 2 Oversee and handle supply contract terms and spends
With easy-to-access data dashboards and customizable contract management reports, you will be able to better monitor and manage your contracts and budget. Moreover, an accurate agreement date ensures transparency and gives the confidence to your team to answer even the complex questions. Plus, you will have the advantage of knowing the completion status of the contract without getting into cumbersome spreadsheets.
Since you are on top of your contracts terms and conditions, you can ensure better regulatory compliance. Here, the library of templates, clauses, etc, can come handy to abide by the required legal terms.
#3 Forecast precisely
Since all of your contract data is at a central repository real-time, accurate forecasting is much easier. You can easily access information related to contracts for a desired good or service, their total valuation even if they are about to expire or require renewal, etc. Moreover, with easy data visualization in a single dashboard, you avoid manual errors when compared to a spreadsheet. Plus, you get timely scheduled alerts and notifications on auto-renewal or expiry that can give you better control over your budget.
#4 Manage team requests (to keep everyone happy!)
Modernizing contract management definitely means shorter contract management lifecycles and improved user experience. With access to template libraries, standard online forms, contract redlining, e-signature, workflow management, your team is better equipped to control the entire contract management process starting from creation until approval or termination. Complete visibility gives you the confidence to share information with internal stakeholders from different departments—be it a CFO, Dept. Head, or Marketing Manager and keep them on the same page.
#5 Be on top of your important dates
Contracts have important dates including renewals, deadlines, etc. Modernizing contract management ensures that you get timely alerts and notifications on these important timelines, so that you and your team are a step ahead in the procurement process.
#6 Manage policies or regulation changes
When you have a central repository for all your contracts, you can easily access the terms and clauses as well as the impact of any new regulations or policies. This can help you readily gather all the material that can be affected with respect to the new changes. For instance, it can be a privacy policy, liability clause or an insurance certificate that may require changes.
#7 Be ready for audits
Digitization of the contract management process means you will have all the versions of the contract (with deletions, changes, additions, etc.) for easy tracking. This means complete information of what was changed, when, etc. ensuring better transparency in the audit process.
Final Words
Contract management is an integral part of the procurement process. However, manual processes can be time-consuming, lead to error-prone transactions, increase financial and supplier risk, and affect operational performance. Adoption of smart, cloud-based digitization solutions for contract management can streamline and automate your entire contract management lifecycle, taking your performance to the next level.
Induzbuy’s smart procurement management solution is a one-stop solution for your procurement and purchasing needs. With functionalities for vendor management, contract management, reconciliations, etc. you can choose the easy path to digitization!
To know more, click here!
