Today’s article is the first in a series of articles centered on our new Collaborative Contract Management report, sponsored by Iasta, and available for download here [Publisher’s note: The links in this article have been corrected.].
Contract management systems have long been used by procurement departments to communicate business requirements, track spend against contracts, and manage supplier relationships. But, as the capabilities in these systems continue to advance, procurement’s ability to improve adherence to contracts and insight into contractual obligations, in support of a broader enterprise compliance and risk management strategy, must follow in stride. This report looks at the collaborative approaches Chief Procurement Officers and their departments can utilize to advance contract management, compliance, and risk management in 2015.
Traditionally, CPOs and their procurement departments have used contracts to codify and manage relationships with the suppliers that procurement has negotiated with to deliver goods and services to the enterprise. Through contracts, procurement teams communicate their expectations to suppliers and ratify them in the form of pricing, service-level agreements (“SLAs”), and other terms and conditions. As a result, all stakeholders – procurement, budget-holders, legal, and suppliers – can be literally and figuratively on the same page regarding contract deliverables, timing, pricing, terms, and the other factors that define the relationship. Even in this conventional form, contract management serves a very important function; but, it has the potential to deliver much greater value to the enterprise.
As their operations steadily mature, CPOs and procurement teams must look for more innovative ways to increase on-contract spend, decrease savings leakage and risk, and enhance their relationships with key stakeholders. Collaborative contract management processes that incorporate automated and innovative technology solutions can drive improved visibility into savings, contracting, buying, and supplier management to enhance contract compliance, while decreasing risk and increasing savings.
In 2015, Chief Procurement Officers and their procurement teams will continue a multi-year trend of collaborating with both internal stakeholders and suppliers to improve performance and reduce the risks that exist within the four walls of the enterprise and across their supply chains. Best-in-Class performers illustrate how collaborative contract management capabilities can engage more stakeholders, help to standardize processes, create visibility into compliance (organizational and supplier), performance, and risk, and ultimately help to elevate the enterprise to the next level of performance. Thus, utilizing the contract management process and any associated tools and strategies to engage, collaborate, and communicate will remain a smart procurement strategy in 2015 and for many years to come.
Click here to download the full report.
