Modernizing Contract Management for Procurement and Purchasing
Contract management is an integral part of any procurement cycle. After all, it’s contracts that define your relationships with vendors, suppliers, outside service providers, and other purchasing and sourcing entities. That’s why it’s important that contract management for procurement and purchasing departments is an efficient and well-managed process.
But if you’re like most procurement and purchasing departments, you still rely on shared folder solutions like SharePoint or Dropbox, employee hard drives, email, and spreadsheets to manage the pre- and post-award phases of your buy-side contracts. Unfortunately, this approach makes the overall management of your contracts inefficient, time-consuming, potentially inaccurate, and unnecessarily exposes your organization to risk. It also makes it difficult to quickly and correctly answer important contract-related questions such as:
“How many contracts are due for autorenewal this month?”
“Which supplier relationships are performing the best?”
“What line items have been fulfilled against these vendor agreements?”
“What contracts are associated with these payment terms?”
“Are we meeting our SLAs with our internal clients and departments?”
In today’s digital age, it’s important for procurement and purchasing departments to digitally transform their approach to contract management and a key enabler of that is contract management software. The use of a modern, cloud-based, and secure software platform for contract lifecycle management not only gets fast and accurate answers to the above questions, but it also gives procurement teams a tremendous level of visibility and insight into their processes, agreements, and relationships.
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By using contract lifecycle management software, purchasing and procurement organizations can help reduce supplier costs, execute agreements with new parties faster, increase compliance, mitigate risk, and better manage internal and external relationships. Below are some specific benefits of how intelligent contract software developed by Contract Logix improves contract management for procurement and purchasing teams as well as the broader organization.
Optimize Vendor Management and SLAs
A key to improving contract management for procurement and purchasing is to be able to get much greater visibility into the health and performance of your supplier relationships. Contract Logix provides this end-to-end visibility by enabling your contract data to be structured at the organizational level as well as the contract record, contact, and document level. This way, you can easily keep an eye on and manage contract terms, dates, and other important information by supplier, supplier type, contract, etc. You get real-time insights into which suppliers are meeting their obligations and which ones aren’t allowing you to act on and manage those relationships accordingly. It also makes managing addendums, amendments, and terminations a piece of cake.
Easily Monitor and Manage Expenses and Terms
With Contract Logix, procurement professionals can monitor and track spend against contracts with their vendors and suppliers. All this data is captured and rolled up into useful dashboards and customizable contract management reports. This not only provides procurement teams fast answers, but it also gives them the confidence in reporting accurate data associated with their agreements. Understanding how much has been completed against a particular agreement or set of agreements with a supplier is as easy as running a quick, automated report. That means no more messy spreadsheets and incomplete data.
Another benefit is that contract software helps ensure compliance and governance by making it easy to monitor and manage contract terms. You can leverage the preapproved clause and template libraries to enforce the use of approved language and formats. You can also quickly search and report on where certain terms and clauses are used with your suppliers.
Accurately Budget and Forecast
Because Contract Logix’s intelligent contract software enables you to manage all your contracts in a centralized repository, you get real-time access to all of your contract data. This helps with forecasting exercises because the platform delivers fast and accurate answers to questions such as the total value of our contracts with a supplier, how many contracts included a certain product, or the value of contracts expiring or renewing over different time periods. Another way it helps is that your contract data can be reported and visualized in graphical dashboards that are based on a single database record as opposed to many spreadsheets with the potential for manual errors. And, the software’s automated alerts and notifications ensure you don’t inadvertently auto-renew an agreement that you wanted to cancel which helps manage your budget.
Keep Internal Clients Happy
And finally, Contract Logix helps contract management for procurement and purchasing is by helping you better support your internal clients – whether it’s the General Counsel, CMO, IT department, or CFO. You can modernize and accelerate your contract management processes resulting in shorter contract cycles and better user experiences. The use of standardized and online forms to request and submit contracts makes it quick and easy for all participants in the process. With features like clause and template libraries, contract redlining, workflow management, and e-signature, the contract assembly, negotiation, and approval process become a lot more streamlined. And since you have complete visibility into the stage and status of every contract, you can promptly answer questions from other departments about where their contracts are in the process.
Always Be Audit-Ready
With contract management software, can easily track and save every change made during the contract creation, negotiation, and approval process. This includes what was changed, when it was changed, who changed it, etc. It provides a detailed historical record of all the edits associated with your agreements. It also provides a comprehensive audit trail so that if you are ever faced with a compliance audit, you’ll be ready.
Identify the Impact of New Regulations and Policies
One of the biggest benefits of centralizing all your contract data and associated documents in Contract Logix’s electronic contract repository is the searchability of your data. If you are faced with new regulations or policies such as GDPR or HIPAA, you can leverage your contract data and run searches for terms like “data,” “privacy,” or “personally identifiable information” to uncover all your contracts and supporting materials that may be affected. You could also run searches on clause types or other language to identify contracts that are impacted by changes to your corporate policies such as a new certificate of insurance, privacy policy, or limitations of liability clause.
Eliminate Missed Deadlines
With the contract system’s built-in automated alerts, reminders, and tasks you can ensure that your purchasing and procurement staff are notified in advance of important contractual obligations such as deadlines, renewals, or other milestones. For example, you can set a notification to cancel a supplier contract that auto-renews yearly with a 30-day notice. Or, perhaps you want to be notified about reaching a purchasing milestone associated with a certain volume that qualifies you for a greater discount tier. Either way, eliminating missed milestones can save you money.
Takeaway
Embracing an efficient and digital approach is key to the success of modernizing contract management for procurement and purchasing teams. Contract management software not only helps you do your job more effectively, but it also helps manage your vendors, better support internal clients, mitigate contract risks, and achieve your company’s financial goals.
Contract Logix is a leading provider of intelligent contract software. Schedule a live demo and learn more about how our platform can help you and your team.
