Top 5 Contract Management Practices in the Procurement Department

1. Top 5 Contract Management Practices in the Procurement Department By ​DocuCollab             © 2019-2020 All Rights Reserved, No part of this document should be modified / used without prior consent. DocuCollab​​- 1604 Spring Hill Road, Suite 216, Tysons, Virginia, 22182, USA Contact Number:​ +1-571-228-7037 | ​Email:​ sales@docucollab.com

2.   Contract Management plays an integral role in the procurement cycle of any         organization. Contracts are inextricably linked to relationships with vendors, suppliers,         outside service providers, and other purchasing /sourcing entities.                              According to Hackett Group research in 2018, procurement professionals agree that             digital transformation will help them achieve critical objectives such as cost-cutting,           improving agility, and improving their productivity to the enterprise. One such digital           transformation that procurement professionals should consider is deploying ​Contract       Lifecycle Management​ (CLM) technology for their contracts.                                                  If procurement and contracting teams rely on manual processes, spreadsheets, and           siloed systems to manage the pre- and post-award phases of buy-side contracts, it               renders the overall management of contracts inefficient, time-consuming, incurs higher           costs and exposes the organization to risk.                                    That’s why it’s important that ​contract management for procurement departments is an             efficient and well-managed process. The following top five practices of contract         management can help organizations improve the efficiency and effectiveness of their         procurement process:                                          Optimizing Vendor Management & Service-Level Agreements One of the best practices to improve ​contract management for procurement is to be able               to get much greater visibility into the performance of supplier relationships. The Hackett               Group’s research identified that managing and measuring procurement performance by           optimizing relationships with vendors helps to achieve the best possible outcomes for           the business. However, with outdated technology, soloed information, and manual           processes, this becomes nearly impossible.                                                                Implementing CLM (Contract Lifecycle Management) Software provides this end-to-end         visibility by enabling contract data to be structured at the organizational level and also               helps to monitor and manage contract terms, dates, important supplier information, type             of supplier, type of contract, etc. With real-time data insights, organizations can know               which suppliers are meeting their obligations and which ones aren’t and can accordingly           manage them.                                                                  Eliminating Manual Process of Creating Purchase & Negotiation Orders Before negotiations, strategic procurement starts with qualifying suppliers. Companies         should streamline the collection and monitoring of supplier data to ensure that they           comply with corporate policies. After collection of important supplier qualification           information, best suppliers are selected. Then purchase order templates are created with           the list of approved suppliers and supplier profile data.                                                    © 2019-2020 All Rights Reserved, No part of this document should be modified / used without prior consent. DocuCollab​​- 1604 Spring Hill Road, Suite 216, Tysons, Virginia, 22182, USA Contact Number:​ +1-571-228-7037 | ​Email:​ sales@docucollab.com

3.   Companies should use up-to-date contract information to create purchase orders         through means of a ​CLM software that features sanctioned templates, approval             workflows, and intelligent guidance that empowers procurement to confidently execute           contracts. This helps in reducing costs owing to the elimination of manual errors and             also acts as a contract compliance check.                                                  Comparing supplier proposals and manually compiling them can be a very time         consuming and arduous task. Best practices to achieve bottom-line results can be made           possible by automating negotiation and supplier selection.                                  Through a comprehensive contract data repository, we can allow the procurement           professionals to identify the right supplier and easily create effective negotiation           documents. Contract data will include pricing, service-level agreements (SLA), and terms           & conditions. Advanced CLM solutions ensure that the organization’s approval policies           are followed and all necessary information is included in every contract.                                                  Streamlining Procurement Processes By creating a central repository, the procurement department will be able to sort and             search all contract information that is stored in digital format. Automation helps             procurement professionals to save time and eliminate inefficient manual searches for           information pertaining to suppliers and         procurement-related costs and enhances the efficiency and productivity of the       department.                                                  current     contracts.     Thus it   reduces         Easily Monitoring and Managing Expenses & Terms Spending transparency in procurement functions helps unlock potential savings and         achieve operational excellence. All the expenses related to contracts with vendors and           suppliers are easily monitored and tracked by procurement professionals using a CLM             solution. Doing away with messy spreadsheets with the potential for manual errors and           incomplete data, these professionals can provide fast answers and report accurate data           related to their supplier agreements through the contract data captured in the graphical           dashboards and customizable contract management reports.                                                                                      By creating a centralized repository of all contract information, it is now easy to monitor               and manage contract terms ensuring compliance and governance. By leveraging pre           approved clauses and template libraries enforcing the use of approved language and           formats, procurement teams can quickly search and report where certain clauses and           terms are used with their suppliers.                                                          © 2019-2020 All Rights Reserved, No part of this document should be modified / used without prior consent. DocuCollab​​- 1604 Spring Hill Road, Suite 216, Tysons, Virginia, 22182, USA Contact Number:​ +1-571-228-7037 | ​Email:​ sales@docucollab.com

4. Enhancing Supplier Performance Visibility Automation helps procurement departments to identify problems at an early stage, by       continually measuring supplier compliance to the terms of contract and through the       purchasing activities based on dynamic supplier performance metrics. This empowers           the procurement department to correct the problems at the initial stage and shift to           suppliers who are performing best to contract, thereby optimizing return on investment.             Thus companies will be able to see a reduction of costs on multi-supplier maintenance                 and improvement of relationships with suppliers. With the information in a centralized           repository, it can flag contract expiration dates so that we never miss deadlines and             ensure contractual milestones are attained.                                                                                                                        For procurement to gain visibility into contract performance across its value chain, it             must have analytics capabilities, audit trail, and compliance enforcement. Organizations             by deploying a modern ​CLM solution can analyze supplier performance and accurately               discover the best practice across contracts to define the most effective KPIs and SLAs             with vendors.                                                  Why Use CLM Software for Procurement? A recent report on contract management states that nearly 81% of organizations do not             use CLM software and as a result face a lack of consistency across contracts,                 cumbersome processing, and supply chain continuity problems.                              Organizations should strive to implement some of the ​best contract management           practices in the procurement department to improve the speed and efficiency of the           procurement function, reduce costs, and ultimately improve the company’s bottom-line           performance.                                        Enterprises that centralize and automate procurement processes by using ​contract           lifecycle management software can be more strategic in their sourcing and negotiations.           It can proactively manage all aspects of the procurement and ​contract management               lifecycle​ to improve performance.                                    How DocuCollab`s Software Can Bring Efficiency In Procurement? Procurement has transformed itself as a key element of business performance within             organizations across the globe by effectively contributing to strategic areas.              The Hackett Group`s research shows that many organizations are moving toward a             single, cloud-based suite that integrates ​enterprise contract management solution as           part of the procurement function to help them improve margins, reduce costs, and               manage risks.                                      © 2019-2020 All Rights Reserved, No part of this document should be modified / used without prior consent. DocuCollab​​- 1604 Spring Hill Road, Suite 216, Tysons, Virginia, 22182, USA Contact Number:​ +1-571-228-7037 | ​Email:​ sales@docucollab.com

5.   By leveraging technologies such as ​DocuCollab Software in the areas of spend analysis,           strategic sourcing, supplier management, contract management, financial savings         management, and procure-to-pay, procurement professionals will be able to drive       competitive performance along these strategic areas.                                        DocuCollab’s cloud-based ​enterprise contract management solution helps organizations       to reduce supplier costs, improve spend under management, increase sourcing           productivity, execute agreements with new parties faster, mitigate risk, better manage           internal and external relationships, and improve process efficiency across spend           categories.                                            Click here to discover how you can automate every step of your contract management               lifecycle through DocuCollab’s seamless ​contract lifecycle management tools​.                © 2019-2020 All Rights Reserved, No part of this document should be modified / used without prior consent. DocuCollab​​- 1604 Spring Hill Road, Suite 216, Tysons, Virginia, 22182, USA Contact Number:​ +1-571-228-7037 | ​Email:​ sales@docucollab.com