In the mid-to-late 1980s, U.S. President Ronald Reagan adopted an old Russian proverb, “doveryai no proveryai” (trust, but verify) to emphasize to Soviet Premiere Mikhail Gorbachev the need to ensure that the two superpowers were adhering to arms control agreements. The two leaders both wanted to seriously reduce their nuclear weapon stockpiles, but needed assurance that both sides were disarming bilaterally and not exposing the other side to undue risk.
Today, the expression continues to apply to geopolitics, as well as many business arrangements, including those between buyers and suppliers. Sourcing and procurement professionals know that it’s a smart strategy to monitor supplier contracts to ensure that both sides are adhering to the agreement, and take action if and when it’s needed. Luckily, modern contract management solutions enable sourcing and procurement pros to do just that. Here’s how.
The reporting features found in many of these solutions allows for standardized, customized, and/or ad-hoc reports to be built by different users and under different circumstances. For example, category manager and line-of-business users can schedule standard contract status reports to be generated for daily or weekly monitoring. They can also set alerts to trigger when certain conditions aren’t met, like if contract deliverables aren’t being fulfilled, or if the contract is about to expire and a new sourcing decision needs to be made. Contract alerts can be adjusted according to risk tolerance and circumstances. For example, if a contract is particularly favorable to the procurement team, staff can set reminders to ensure that the contract is renewed. Likewise, if the contract is not favorable, the same reminder can be set so that it is not automatically renewed and the team is locked in for another term.
For special customers, like auditors or C-level executives, ad-hoc contract status reports can be run and tailored to their information needs, including different levels of liability. No team likes to be surprised by their higher ups for data pulls or reporting. But occasionally, ad-hoc reporting requirements come down and procurement teams need to be able to respond to their unique needs. In these cases, end-users can search for specific contract, deliverable, or supplier data and use different search methods. What the boss wants, he gets.
Trust but verify doesn’t just apply to suppliers; it applies to the procurement team, too. More robust contract reporting features can give procurement leaders visibility into the contract execution process and the progress that is being made. For example, senior procurement leaders can gain visibility into each stage of the contract execution process and ensure that they move from authoring to review to risk assessment to signature. Poorly executed contracts can be liabilities for enterprises, and procurement leaders can mitigate these risks by leveraging contract reporting features to gain better visibility into the process and verify proper execution.
We’ve come a long way since détente between the U.S. and the Soviet Union in the 1980s (although, you wouldn’t know it by reading today’s headlines). Some of the parallels between Cold War disarmament and modern contract management are that two parties can agree to do business under specific terms and conditions and leverage modern technology to drive visibility and ensure compliance. In the eighties, the two sides had verifying teams, spy satellites, and reconnaissance planes to assist them. Today, business leaders have robust contract reporting tools to ensure that trading partners are on the same page and doing what needs to be done to remain compliant to the original agreement.
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Tagged in: Contract Lifecycle Management, People, Process, Sourcing, Supplier Performance Management, Supplier Relationship Management, Technology
