3 Ways Contract Management Software Streamlines the Procurement Process
by Corridor Company on February 25, 2019
For most companies, procurement is an essential yet often difficult business function that relies on an efficient contract management process to be successful. Getting what you need from vendors and other clients requires careful contract management that is best accomplished with advanced contract management software. If you are still relying on basic email or spreadsheets to manage your procurement process across multiple departments, you may be losing time and money. Installing contract management software will streamline your procurement process in the following ways, adding efficiency and possibly a touch of glamour to it.
In some companies, certain departments function as separate entities and do not proactively seek information from procurement or legal. When that department needs to make a purchase, it has no clue whether a vendor contract exists or if there are preferred pricing terms. The right hand doesn't know what the left hand has already done. At this point, one of two things happen:
- The department makes its own vendor selection and purchase
- The department calls procurement, explains its needs, and tasks procurement with finding the right vendor and contract
Even when these departments do reach out to procurement, contracts signed some time ago may escape the notice of the procurement team if they are not in a searchable repository. In the past, contracts and their purchasing terms were stored in file cabinets with the potential to be overlooked.
With contract management software, all interested parties, including those outside of procurement, can check to see if a contract with a certain vendor or for a certain item already exists. Business users can see for themselves if a vendor contract exists and authorized purchasers can act on it. This feature saves those in procurement time since they will not be checking for the existence of a contract, or worse, creating a redundant contract. Also, the procurement team can audit purchases and invoices against the contract terms and make sure that they are receiving the most favorable terms agreed to. If the existing contract is not positive for your company, your team can flag it for renegotiation, using the promise of continued business as an incentive. At the very least, this software means no one is desperately searching through stacks of paper to find existing agreements.
Ease of Access
Many departments in your company have a keen interest in procurement, but they may be left outside of the contract’s development, often because dealing with too many people as contracts are drafted slows the process down and adds a layer of confusion. However, department heads and business users often have the best understanding of what goods and services the company needs to be productive, so they need to be given a voice in the procurement and contract drafting process. If they are not, too many mistakes are made in dealing with suppliers: goods are inadequately described, purchasing goals are unrealistic, service levels are not well aligned, specs and KPIs are inadequate.
A good contract management software program automates the process of contract request and creation, allowing users from outside of procurement to submit purchase requisitions and quickly route them to the correct parties. This process minimizes communication lapses between other departments and procurement. A contract management system keeps everyone on task -- you won't be troubled by lost emails or misplaced internal communications. As a result, less time is wasted and errors are eliminated before the final contract is signed. And the people who know goods and services best have a chance to weigh in.
Review and Approval Process
The hard work of drafting procurement contracts doesn't complete the process. You still need all parties to review and approve the documents. In a large company, that process can resemble herding cats, never an advisable task. Employees may be on business trips, on vacation, out sick – or simply busy. Some may never check their email or else read their messages and forget them, even those marked "URGENT." Contract drafts end up in limbo for weeks while you try to get everyone to review and approve them.
With contract management software, the process is automated. The proper notifications are sent to those who need to approve the material, and they can then log into the system no matter where they are. If the vice president of marketing is lying on a beach in Hawaii, the system will briefly interrupt his fun in the sun so that you can get the contract finalized. If the head of procurement is recovering from an appendectomy, a contract review task can reach her at home. In both case, review and approval of the draft contract can happen on a mobile device as easily as on an office laptop. Contract management software also means that no one needs to be people herding. The program does this automatically by routing documents for review and approval with no fuss. Emailed reminders and escalations keep every participant alert to what they need to do next. Materials are reviewed more quickly so necessary changes can be made in hours instead of weeks.
Managing your contract process may never rise to the level of fun, but it can become easier, more effective and more profitable. Procurement is an essential part of any business, and those companies that manage this business function well are more successful. Contract management software eliminates communication problems and helps prevent costly contract mistakes. The automated procedures allow those outside of procurement to closely follow the process and weigh in when necessary. And the program will alert those employees who need to review and approve new contracts.
In this technological age, your company will miss out if you do not use the most advanced tools at your disposal. Trying to create and manage new contracts without the right software means your company cannot function at its highest level. Investing in contract management software means that your business stays competitive while you and your team experience less stress and more success.