A quote from Spend matters,“Great procurement work can be undone by weak contract management. But even a less successful procurement or sourcing phase can be recovered through effective contract management.” highlights the importance of contract management.

Even though defining appropriate sourcing strategy, selecting most competitive suppliers and negotiating are central to the success of procurement, it can be easily reversed if the contract is not managed properly. In the recent times there have been multiple cases highlighting the same. For instance,

• Retail giant Tesco recently terminated contract with the supplier providing horse meat.
• Wal-Mart issued zero tolerance policy to its suppliers on subcontracting.

To ensure maximum operational and financial performance it is necessary to effectively manage the various stages of contract life cycle, right from drafting the contract to execution and analysis of the contract.

There are various stakeholders involved in the different stages of the contract life cycle. The various stakeholders are legal team, sales, finance and even the supplier. Each stakeholder has her/his own priorities in managing the contract life cycle. Hence, it is necessary there is a common platform for the stakeholders to collaborate.

Learn More: Zycus iContract Solution;

Before discussing the 5 steps for managing contracts let us explore the spokes in contract lifecycle management wheel

• Tracking global contract: For an organization spread across the globe, it would be difficult to track the contracts that reside in multiple locations, existing in different currency, with different terms & conditions.
• Measuring contract performance: It is imperative to set strategic benchmark to measure the efficiency of the contract. With many contracts in multiple formats it is tedious to track its performance.
• Disparate Inconsistent Data: Contracts of MNCs usually lie across geographies in different languages and formats. Thus the data is not centralized and standardized. This obstructs the visibility into spend.
• Collaborating with the stakeholders: CLM is adversely impacted due to lack of visibility on account of inconsistent data, and a common platform for the stakeholders to collaborate,.

To read about the 1^st step in the series for effectively managing contract life cycle, stay tuned!!

For further reading, click on the download button below to access the white paper-5 Steps to Realizing Value from Contract Lifecycle Management