5 Ways to Unlock the Value in your Contract Management System
Modern procurement teams have seen their responsibilities grow in recent years. However, it’s important to make sure your organization isn’t losing track of the basics. One of the most important fundamental processes for every procurement organization is contract management. So how can you be confident you’re truly optimizing your contract management workflow?
Steps to Optimization
If you instinctively responded by saying something like, “Well, I have a digital contract system,” then you’re on the right track (and you’re probably in the minority). Unfortunately, many customers with contract management systems (CMS) are leaving untapped savings on the table.
Contract management technology like JAGGAER Contracts provides a wealth of value depending on where you are on your contract management transformation. More than just a repository, Contracts includes tools to easily author agreements and oversee renewals. This kind of digital platform can integrate with the rest of your processes so that contract data is easily used in other areas of your workflow, saving valuable employee time.
Regardless of what electronic solution you use, there are a few steps you should be taking to establish better contract lifecycle management.
1. Manage Contract Storage
It can’t be overstated how important it is just to know where your contracts are stored. Ideally, all contracts throughout your organization are located in one central repository that’s shared across departments. Contract repositories provide centralized storage of documents with the ability to tag, categorize, and structure metadata about your contracts.
Beyond just organization and access, a central repository also allows transparency and a single source of truth. When everyone has access to one definitive version of the contract, there are no longer disagreements about what was agreed to and when. This kind of clarity can not only improve internal coordination, but it can also help to improve supplier relationships by keeping a consistent message between your organization and theirs.
2. Reporting and Analysis
The second major step toward maximizing the benefits of your contracts solution is developing a reporting system and analyzing data. Reporting and analysis extend the functionality of your contract repository by answering key questions around your contract portfolio.
Having signed agreements accessible and organized is just the bare minimum. By analyzing them in bulk you can start to identify best practices and inconsistencies across suppliers. Then, when it comes time for renewals, you can start to implement more standardized language across all of your contracts.
Plus, pull data directly from contracts and weight them against actual supplier performance. That way you can quickly see who’s meeting the agreed-upon terms and who’s missing targets, whether that’s on-time invoices, delivery times, bulk discounting or any other key business metrics.
3. Smart Authoring and Templates
How much time do your contract managers spend authoring document after document? Authoring is no longer a chore as a CMS can automate the building of contracts through Smart Templates. Simply select the type of contract you need and the system will pull from predefined templates, then pull in supplier information from their profile.
This process not only streamlines contract creation but also reduces risk. Smart authoring and intuitive templates mean that you can standardize language while decreasing the likelihood of inadvertently leaving out important clauses or terms.
Artificial intelligence systems are making contract management even more powerful with intelligent automated authoring, using AI to predict which clauses a contract might need based on the supplier’s location, size, industry and more. Gone are the days of manual authoring line by line. Instead, your team can focus on building strategic relationships and optimizing new contracts.
4. Connect Contracts to Source to Pay Processes
Tools like smart authoring can certainly simplify the contracts process. Connecting to the overall digital source to pay process, though, can completely revolutionize the way your procurement team operates. Connecting your contract to ensure compliance with your upstream and downstream processes allows you to leverage important data at every stage of the procurement lifecycle.
Not only can contracts draw in supplier data to make the authoring process easier, but your procurement tools can automatically incorporate negotiated pricing and prioritize contracted suppliers, driving bottom-line savings across the organization. Supplier Management can measure vendors against agreements and flag discrepancies automatically, triggering communications or a supplier improvement program.
The possibilities are endless, and you can optimize them further based on the needs of your organization. This is where you can truly start to add value from your contracts tools.
5. Continually Push for Improvements
It’s important not to revise your contracts process once and assume that you’ve done the job. Rather, you have to continue to refine, optimize and improve! Not only will you gradually improve efficiency, but you’ll also start to see patterns emerge over time. For example, understanding your process bottlenecks or even where your most negotiated clauses are can improve your throughput. It will take time to identify these patterns, but once you do you can start new initiatives to make further progress.
Don’t let contract management be a set it and forget it mentality. Collaborate with stakeholders to understand what they care about from a contract management perspective. Ask yourself, can you go further to improve your current process? Have you realized the full benefit of your CMS system?
Starting your optimization journey might feel daunting, but with these simple steps, you can start to see dramatic savings and efficiencies quickly. Stick to the basics and follow contract management best practices, and you’ll see the results.
JAGGAER has helped thousands of customers across industries take the next step toward digitalization with contract management software. Get started today to put your organization on the right track. For more on contract management best practices, download our checklist on contract negotiation.