In this guide you will learn the many benefits of contract management, including how you can effectively manage contracts.
Contract management is the process of managing contracts between buyers and suppliers so that all contractual obligations are fulfilled compliantly and documented appropriately.
Managing your organisation’s contracts efficiently throughout the contract lifecycle is a key part of the procurement process, which can deliver savings across all parts of the supply chain.
Contract management software can be an asset or a liability, depending on how digitally integrated your process is, and tools like our own Contract Register can help you manage your contracts more effectively.
But first, what is the contract management, and how can it help the procurement process?
How to manage a contract
At the start of the procurement process, a contract is created that outlines the operational, functional and business objectives which will be met as a result of the agreement.
At this stage of the contract management process, both parties agree on relevant Service Level Agreements (SLAs) and Key Performance Indicators (KPIs). These let the supplier know what is expected of them and provide a framework for both parties to measure how successfully the terms of the contract are being met.
Once these terms have been agreed, the focus then shifts to the day-to-day management of the contract, which includes:
- Ensuring the delivery of products as and when they are ordered
- Managing the ongoing dialogue between buyers and suppliers to make sure that agreed deadlines are met
- Throughout the process, seeking improvements which will drive efficiencies and increase profits
- Regular assessment to ensure that the terms of the contract are adhered to and key milestones are met
What are the benefits of using a contract management system?
At any given time, there may be hundreds of active contracts within your company, and finding a way to manage them is crucial. It’s important to have a contract management framework to ensure that products and services are delivered on time, on budget and receive support throughout their lifecycle.
When you have the right contract management system in place, it has many benefits, including:
Evaluation of the supplier’s performance throughout the contract allowing for action to be taken to increase the performance and effectiveness of the contract.
- Decisions taken at the proper time, which mitigates potential risks appearing in the future
- The supplier is cooperative and responsive to the organisation’s needs
- The delivery of services is satisfactory to both parties
- There are no contract disputes or surprises
Additionally, having a contract management framework in place is beneficial to maximise efficiencies within an organisation because it automates some of the processes which arise from managing a contract, saving your organisation countless man hours.
How Delta can help manage your contracts more effectively
To manage your organisation’s contracts, you’ll need a software solution which is up to the task, and Delta’s Contract Register can help.
Contract Register can help you manage and track performance of all your company’s contracts and agreements in one central location. Use it to set reminders, plan more efficiently and meet lead times more effectively.
Additionally, Delta’s secure EU-compliant service keeps these resources safe. This allows buyers to analyse their lifecycle costs and help get the most out of their contracts.
We hope this blog has given you a better understanding of what contract management is.
Learn more about Contract Management
Our sister brand PASS Procurement are host Contract Management training days. Find out more at www.passprocurement.co.uk