How to manage contracts in procurement: a concise guide to best practices and benefitse-Procurement Insights ● January 9, 2023
The more companies grow, the more the number of contracts to manage multiplies: it is easy to end up with hundreds of different suppliers and thousands of contracts each year, whose documentation, clauses, renewals, and established service levels need to be tracked.
Therefore, effective management of the entire contract lifecycle requires a high level of collaboration between departments: on the one hand, the purchasing department, which deals directly with suppliers, and on the other hand, the administrative department and compliance officers, who are in charge of ensuring supply compliance.
To remain competitive and efficient in a market that is increasingly variable and shaken by unpredictable events, it is necessary to digitize the entire Contract Lifecycle Management (CLM) process as the company acquires new suppliers and increases its turnover.
Therefore, it becomes strategic to invest in software like Online Procurement that integrates contract and supplier management into one platform to ensure that signed purchasing conditions are always fulfilled.
Online Procurement for effective contract lifecycle management
Create a secure and centralized digital repository of contracts
Efficient contract organization can only go with a centralized, digital and secure document repository that allows all stakeholders involved in the process to access documentation and perform instant searches, thanks to powerful categorization indexing.
Set up automatic alerts to keep track of every stage of contract management
Those who work in procurement know that there are cost-saving opportunities to be gained from contract renewals and that automatic contract renewals, if not properly monitored, can instead turn into burdensome cost items. That’s why the automated alert system built into Online Procurement, which can be configured based on business needs, is the smart solution never to lose sight of contract milestones, renewal dates, and additional deadlines to monitor.
Increase productivity and collaboration between purchasing, administrative and legal departments
As the size and complexity of the corporate supplier base grow, the procurement, administrative, and legal departments are working increasingly interconnected: each needs to be clear about its responsibilities in terms of compliance, risk mitigation, and contract-related cost containment. Simplifying collaboration with standardized and shared procedures is essential to keep productivity high.
Select ad hoc KPIs to monitor execution and identify the best suppliers
Contract-related metrics must be specific, measurable, achievable, relevant, and timely, such as missed milestones, expected annual contract value, and quality of delivery. Integration between general vendor rating and contract performance evaluation allows at-a-glance identification of the best suppliers, saving time spent on comparative analysis.
Keeping track of contracts, from drafting to archiving
A comprehensive software suite such as Online Procurement includes contract management tools that allow all contract and supplier information and documents to be centralized in a single platform, making them visible only to those with the necessary permissions. Resources such as automated workflows, automatic contract generation from negotiations, and statistics on execution status are key to monitoring and speeding up procedures throughout the execution cycle while keeping compliance levels high.
The benefits of an optimized, digital contract management workflow
By implementing a digital contract management system, Contract Managers and CPOs can benefit from:
- Reduced contract approval times
- Higher contract and legal compliance, and reduced risks associated with contracts
- Financial optimization through better control over deadlines and renewals
- Improved transparency and traceability
- Comprehensive evaluation and monitoring of contract performance
Contract Management: minimize risk, maximize the performance of your supplier contracts
With Online Procurement’s advanced features dedicated to contract management, any company, large or small, can immediately benefit from more compliant, efficient, and secure contract management throughout its entire lifecycle, opening up new business and cost containment opportunities.