Part 1 of this 2 part series provides a brief overview into the reasons for the collaboration challenges between procurement and legal departments. Part 2 of the series looks into the technology and process initiatives that enable a collaborative relationship between the two functionaries. The need of the hour is for the contracting process to enable collaboration between the procurement and legal functions rather than be a cause for dissent. It is imperative that a process is created within the organization that makes contract authoring, creation and management simpler.
Although getting buy in from employees in the procurement and legal teams is important, the first step to have an effective process in place is to invest in the right technology. A contract management solution should be able to foster collaboration by providing clause libraries and standard contract templates that ensure contracts don’t miss out on any mandatory clauses and terms. This will help in reducing the time for legal review as well as ensuring minimum exposure to risk. Although it should provide a sufficient collection of standardized clauses and templates the contract management solution should also have customizable work flows that permit the insertion of clauses that help organizations take advantage of market conditions and supplier discounts. There should always be room for renegotiation especially for volatile commodities. This can be achieved by putting clauses like escalation/de-escalation clauses or conditions on contract renewal based on prevalent commodity market prices that insure the organization against volatility risks.
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Technology as an enabler:
An ideal solution to this collaboration conundrum would be a solution that streamlines all the steps of the contract management process. A typical contract management process can be divided into three major stages.