Nothing is more pressing right now than getting a handle on your supply & contract management. Given that supply & contract management is such a fundamental part of any business, this might seem a ludicrous statement; surely everyone has sorted out their supply & contract management hygiene by now?
Short answer: no, they haven’t. It doesn’t matter whether we’re talking about an SME or an ASX 100 – supply & contract management is traditionally done poorly. And this hurts companies. It masks money pits, hides savings opportunities and exposes you to risk.
Knowing this, many companies are running out now to buy a contract management software solution. Fantastic. But they better have their data and corresponding analytics in order first, otherwise that’s like putting a cast on a compound fracture before setting the bone. You’ve missed an important step.
Contract Management in 2021
Businesses that manage supplier relationships without a contract found themselves caught out during COVID-19. Many suppliers hiked their prices, and those who had rolling purchase orders were either forced to comply or look for an alternative at a time when suppliers were thin on the ground. Contracts provide protection and are there to help business manage risk and make buying decisions.
Of course, that protection is contingent upon good management. Many businesses still have physical contracts with no digital backup. Where are these located? Who is managing the filing system? When COVID hit and offices emptied, how did your workers access and manage these contracts from home, let alone form new ones?
What’s more, dealing with data security, privacy laws, GDPR and more means we need to have our online repository of contracts located in the country. These reasons and more are behind the 2021 scramble for a supply & contract management software solution. The pivotal first step is, however, getting a handle on where you are currently on the maturity cure and to assess your readiness to adopt a software. Not to mention contract compliance; if your processes are not currently working for you, adding software will not fix your issues.
Contract compliance hygiene must be your first step
There are some great performance management software solutions on the market right now, like Per Angusta. But these systems are only as good as the data they feed on. And we get it – getting visibility of your spend is hard; many organisations don’t have the technology to handle it.
We do. Purchasing Index’s Compliance & Transformation data service provides the analysis which can then be fed into any transformation / digital solution you can consider like Per Angusta.
Here’s what our dashboard can do for you.
Overview of your contract register
The first step when getting a handle on your contract management is figuring out the current state of your contracts. Our dashboards can tell you:
- How many open contracts you have.
- The number of contracts close to expiry.
- The details of your contracts (values, dates, etc).
- The distribution of contracts by different dimensions in the data.
Contracted supplier analysis
If we had only one contract per supplier, life would be so much simpler. Alas, that’s not the reality as many businesses have multiple contracts per supplier. Fortunately, another feature of our dashboard is the ability to analyse the spend profile of your supplier base. At a glance, you’ll be able to see the total value and number of contracts per supplier. Separate windows also provide contract-level details for verification and validation.
It’s the bane of many organisations – purchasing orders that exceed the total value of the contract. Our dashboards track these spends and – depending on the data provided – provide details such as originator/approver of the contract or purchase order.
We can even keep track of retrospective purchase orders by comparing purchase order dates with invoiced dates. With the right data, you’ll be able to identify the regions, entities, divisions and originators of these POs. With this information in hand, you can track performance against KPIs and identify repeated non-compliances.
Split purchase orders are a nightmare to identify. Based on supplier commonality and difference in purchase order dates, however, our dashboards make it easy to flag possible PO splits. All POs deemed to be possible split orders are highlighted along with the number of these per supplier.
The first step in contract management
Contractual compliance hygiene is a must before putting in place any kind of procurement performance management software system. Fortunately, our dashboards can be fully integrated with any system you may require, so when you’re ready for the next step, it can be performed seamlessly and efficiently.
2021 is the year to get control of your suppliers and get them contracted. Take the first step and get in touch with Purchasing Index and have a chat about our Compliance & Transformation solutions.
This article was originally posted on comprara.com.au.