4 Ways to Prevent Procurement Contract Management Lapses
July 31, 2019 | 4 min read
Business process management (BPM) for procurement contract management is easy to follow.
Contract management is a serious problem in the procurement industry. One lapse sets off a chain reaction. From terms and conditions confusion to incorrect deliveries and even full production stoppage, fixing the back-up of a contract lapse is time consuming, frustrating, and costly to all parties involved. Now multiply that by the number of contracts in effect with a single buyer or seller and you can see what a headache the procurement team is up against. The domino effect is a real danger in procurement organizations.
Everyone knows that business runs smoothly when production runs a tight ship. Expectations are fulfilled and steady business leads to strong relations over time. With today’s e-Procurement technologies, there are solutions and features that make effective contract management easier than ever before. Here are 4 ways to prevent procurement contract lapses.
1. Watch for Important Deadlines
If you know when important dates are approaching, your procurement team can avoid vendor contract failure. When a contract is set to expire, the team’s job is to communicate, negotiate, and prepare to put a new contract on the books before the old one expires. Watching dates on a traditional wall calendar is risky. You may notice a deadline approaching but when work is busy, priorities may put off dealing with the contract until it’s too late.
Digital e-Procurement systems have contract management features that minimize this risk and “watch” important deadlines for you. Automatic SMS and email notifications, reminders, urgency settings, and even supervisor notifications will avoid the hiccups that, unchecked, would result in a contract lapse.
2. Keep Both Parties Informed About Contract Renewals
As an expiration deadline approaches, remember that contract renewals are not instantaneous nor are they automatic. Both the buyer and the supplier need to be happy with the current terms in order to renew. In many cases after a year or more, slight adjustments due to changing market costs are to be expected. Though small adjustments sound easy, there are multiple hoops to leap through before moving ahead. Your procurement team needs to cover multiple internal and external approvals with suppliers, renegotiate wording, protocol, and settle on the new terms of agreement. This includes native e-signature and DocuSign capabilities. The execution side of contract management tends to be the most time-consuming process because it involves so many individual people and touch points.
Even if a new contract needs to be drawn up, digitized contract management requires authoring and template features that make it easy to produce a new document.
e-Procurement software has collaboration and task management features that keep buyer and seller in close contact without messages getting lost in a full email inbox. A digitized contract management solution also integrates business process management (BPM) workflow automations so that when new contract terms are initiated, the follow-up authorization steps are automated. With electronic signatures, this means the final person can sign off on the new contract and get it on the books faster without the danger of a single point of failure. One person with a busy week can’t hold up the entire approval workflow anymore and the post award process can happen smoothly.
3. Maintain Control of Contract Lifecycles
With communication between buyers and sellers comes control. By having close communications via contract management software, both parties retain control and equal footing is more likely. Transparency gets rid of information asymmetry. Version control even keeps tabs on when contracts have been edited, by whom, the dates on changes, and copies of older versions for reference.
Customizable user interfaces (UI) make sure this is all happening without your procurement team having to learn a whole new e-Procurement system. The look and feel of your contract management solution can look exactly like the main system that your team is already comfortable with. This makes contract lifecycle management easier on your staff.
4. Implement Digitized Contract Management
Digitized e-Procurement solutions handle a variety of advanced issues. Using the following contract management features, you can further evaluate your procurement practices and assess how to improve business.
- supplier comparison
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audit logs
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advanced search and categorization
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granular access
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analytics and reports to reduce cost
The benefits of going digital are incredible. Watching deadlines, communicating between buyer and seller to negotiate renewals, lifecycle management, and advanced analytics are all possible with digitized contract management solutions. As part of an integrated e-Procurement platform, digitized contract management is a major feature that not only makes work easier on your procurement team but is a smart tool for implementing business strategy.
To find out if you are ready to digitize your contract management processes, request a demo of ProcurePort’s cloud-hosted e-procurement solution today.
