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Contract Management – What Are The Most Important Practices?

Many procurement professionals despair of their organisation’s approach to contract management. It’s not uncommon for employees to have contracts lurking on spreadsheets or buried deep within email exchanges. Not only is this risky and highly inefficient, but it means that a lot of important information gets lost.

In some cases, poor contract management is due to a lack of education surrounding existing processes and technology. In others, organisations are simply stuck in the past.

Here are five ways for procurement to assess and improve their organisation’s contract management processes.

1. Continually analyse your existing processes

When it comes to contract management, there’s always room for improvement. Outline your organisation’s existing processes so your team can analyse what’s working and what’s not. Do you need to provide more training, allocate additional resources, or invest in new technology?

2. Implement CLM Software

For procurement professionals looking to improve their contract management processes to drive efficiency and reduce cost, achieving greater visibility into vendor performance is an absolute priority. Monitoring supplier information and performance and managing contract terms becomes much easier with Contract Lifecycle Management (CLM) software.

A far cry from outdated and slow manual processes, CLM technology provides a wealth of benefits. For example, procurement will gain access to real-time supplier information, highlighting those who are meeting expectations and those that are underperforming. It takes less time to create and manage contracts with shortened approval times, and your organisation’s contract lifecycle completion rate is likely to increase.

3. Get executive buy-in before introducing new processes

Before you start revamping or upgrading your contract management processes, you’ll need to ensure you have the support and buy-in of your organisation’s key stakeholders. This is particularly crucial if you’re looking to implement new software –  without support from the top, you’ll struggle to achieve company-wide adoption. If you do opt for a CLM software, it’s  useful to decide early on who will be responsible for running and overseeing the technology.

4. Make contract management a priority

Contract management should be a procurement priority, even if you feel as though your organisation’s processes are laborious and time-consuming. Procurement teams must invest adequate resources to ensure both parties remain happy, engaged, and focussed.

5. Do your due diligence

A big part of contract management is implementing effective processes to ensure things go right. But what do you do if and when things go wrong? Have you established a system which means your team can identify problems before they spiral out of control? Where and how are documents stored and who has access to them?

If your organisation is operating under an old-fashioned system, it’s all the more important to ensure everyone knows how to access the information they need. If you are in the process of, or considering, implementing CLM technology, how will data be transferred from your existing system to the next?

Join PASA Connect today

On 24th June, PASA Connect is hosting a virtual roundtable, “The 12 Best Practices of Contract Management,” facilitated by Dr Sara Cullen.

To learn more about PASA Connect, including pricing information and how to join, please contact Jonathan Dutton via:
T: 0404 452861
E: jonathan@pasa.net.au

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