Contract management in regards to procurement refers to the process of managing any and all contracts that have been drawn up as legal documents while forging working relationships with the likes of customers, partners and vendors. 

Contract management consists of the negotiations of terms and conditions in addition to the documentation and agreement on any alterations to the contract by all parties concerned, making it a process of management, execution and analysis of the efficient management of business contracts. 

What is procurement software?

Procurement software refers to a computer program or suite that assists organisations with automating purchasing materials and the maintenance of an inventory of goods. The software is able to help with the generation of purchase orders, the execution of online ordering processes, match invoices to the materials that have been received from vendors and ensure that all bills are paid electronically. 

Visibility & tracking

Having increased visibility in regards to complex supply chains means that there will be much less disruption, lower costs and a greater degree of customer satisfaction.  The use of procurement software is an excellent method of creating better visibility which in turn can empower a business to be able to identify and correct any weaknesses within their supply chain including order fulfilment issues and inventory shortfalls before they turn into serious problems. 

Procurement software increases visibility by allowing the tracking of orders, purchases, the arrival of inventory and payments and having all of these factors featured in the same place, making them much more accessible and easy to keep an eye on to ensure that all of these facets are being handled in the correct manner and in a timely fashion. 

The acceleration of process times and approvals

The higher efficiency that is created by the use of procurement software means that the time it takes for processing and for approvals to be given will also be accelerated rapidly. 

Procurement software manages the whole process of procurement within the one place, which means that processing is streamlined and orders can be made and approved very quickly everything is handled in the same place. 

The management of suppliers and procurement compliance management

Supplier management refers to the process that is in place to make sure that an organisation is receiving maximum value from the money that it is paying to its suppliers. As these supplies are vital for the smooth running of an organisation, it is crucial for both that organisation and its suppliers to engage in a professional and effective manner that ensures compliance on both sides and can identify and mitigate any risks, such as if a supplier fails to deliver on time. 

Risk Reduction

Enforcing and operating on the latest terms, conditions, controls and policies improves overall contract compliance. According to Aberdeen, compliance management is improves 55% with a contract management system. Being compliant, and being able to demonstrate it, depends on traceable audit trails and compliance monitoring. On the buy-side, standardizing processes and procedures decreases maverick buying and supply risk while increasing spend leverage. The net effect is that supply chain risks are reduces and buys as a whole become less costly and more valuable.

Furthermore, a contact management system enables much greater effectiveness in supplier onboarding with the right validation and certification tools. It also makes for easy identification of contracts with diversity suppliers and those in high-risk zones — due to natural disasters, political unrest, or economic uncertainty — that is critical to organizational risk management. Also, policy or regulation violations can catch dealt with quickly.

Financial Optimization

A contract management system helps to reduce legal fees and eliminate unplanned renewals of unwanted services. Additionally, spend visibility is another high-value benefit. According to Ardent Partners, enterprises that link their sourcing and contracting processes are more. Likely retain a higher percentage of identifies savings; add an accounts payable automation solution to the mix, and cash flow optimization also gets a boost.

In fact, best-in-class procurement teams reported an annual savings rate that is 37% higher than their peers. Buying from approved suppliers at the right times. For the right quantities at agreed-upon prices reduces “off-contract” spending or maverick spending. And tracking rebates, delivery terms and volume discounts can insure. That all of the savings negotiates in a sourcing cycle are captures.

Productivity / Operational Effectiveness

Forecasting is vastly improves with better data and analytics. A contract management system tracks critical milestones and provides automated alerts and tools that let users schedule notifications as needed. By eliminating manual processes and centralizing your document repository you gain greater control and improve process and workflow efficiency.

Negotiating a contract is only the beginning of a relationship. Companies need to ensure that they are adequately managing their obligations and agreements. Using the proper tools to track and monitor contracts will impact your company in a positive way. Making a big difference in managing supplier relationships and spend.

Ensuring the contractually correct amount of revenue is realize as early as possible can substantially impact an organization’s bottom line. The resulting ROI is typically many times the cost of implementing and operating a contract management solution. And projects are usually complete in a much shorter time.

To learn more about how much a contract management solution can do to improve your business impact. Download the Corcentric CLM Starter Kit.

To see first-hand how a modular, integrated contract management solution works, schedule a demonstration of the Corcentric Platform.

Procurement software is able to automate all the ins and outs of supplier management. Enacting procurement compliance management to ensure all protocols. For the company spend share that is suppose to be controlled by procurement are adheres to. 

The advantages of contract management in procurement software are just another reason. Why businesses should contract Vendor Panel to adopt their services immediately.