Contract management is an indispensable part of the procurement cycle of any organization. After all, contracts are always connected to a company’s relationship with suppliers, vendors, external service providers, and more.
Manually processing contracts could be inefficient and time-consuming, leading to higher expenses and possible data breaches. As such, it is important for procurement and contracting teams to follow a well-managed process.
The top five ways to make contract management more efficient and effective include the following:
1. Optimize Supplier Management and Service-Level Contracts
The procurement department is responsible for giving more visibility to the performance of supplier relationships. By optimizing the company’s working relationship with vendors, you can easily manage and measure procurement performance. The best way to do so would be to implement technology as necessary; this way, the team will reap the benefits of contract management in procurement.
Using Contract Lifecycle Management (CLM) software, the procurement team can easily structure contract data at an organizational level. It will also allow them to manage and monitor the contract terms, vital vendor data, and more. With these automated insights, companies will know which suppliers are meeting their end of the deal and which ones aren’t.
2. Omit the Manual Process of Negotiation and Purchase Orders
Strategic procurement begins with finding qualified suppliers. The team needs to analyze existing supplier data to narrow down which ones can meet business standards. Once the best suppliers have been chosen, the purchase order templates can be made.
To ensure that the company has up-to-date information, they should use an automated contract management system, such as CLM software. This will allow the procurement team to generate purchase orders efficiently, giving them more confidence when managing contracts. Using automated contract management will also eliminate manual errors.
3. Streamline the Procurement Process
A central repository enables the procurement team to sort all contract information digitally. This will save time and eliminate inefficient manual searches for data relevant to the suppliers and their contracts. As a result, the department becomes more productive and efficient.
4. Monitor and Manage Expenses and Contract Terms
Transparency with expenses in procurement teams helps them determine which areas they can save money on and what they can do to achieve operational efficiency. Departments that use an automated contract management system can easily monitor expenses related to suppliers and vendors. Without potentially inaccurate spreadsheets, the procurement team can quickly generate reports with correct data about supplier agreements.
5. Improve the Supplier Performance Visibility
An automated contract management system can help teams spot any problems early in the process. They can do so because of their ability to track the supplier’s compliance with the contract terms. By identifying the issues early on, the procurement team can find the best solution immediately and start coordinating with suppliers who can comply best with the agreement.
Companies that understand the benefits of contract management in procurement are more likely to see a healthy return on their investment. They will also significantly decrease the expenses on multi-supplier maintenance and maintain good relations with their chosen suppliers.
Utilizing an automated contract management system enables procurement teams to manage contracts better and identify which suppliers can meet the contract terms. They also gradually decrease the instances of errors during the process.
If you are interested in trying out an automated contact management system, our company has you covered. Anapact proudly offers contract management software that is designed to be user-friendly. Our enterprise contract lifecycle management solution is built for small and medium-sized businesses across the country. For inquiries about our contract management software, contact us today.