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Leveraging technology to drive business performance | Zycus Procurement Blog

Leveraging technology to drive business performance – Part 3

By Rohitkumar Nair
In Contract Management
Jan 19th, 2012
0 Comments
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In the second part of the 5 part series on ‘Leveraging technology to drive business performance’ we provided an overview on ‘Strategic decision making on future sourcing projects’. (Part 1, Part 2).  Part 3 of the series will focus on contract management which also forms an important part of strategic sourcing. Contract management is a process which encompasses activities right from contract drafting to contract optimizing. This post will list down the best practices adopted by best-in-class organizations with respect to contract management.

1. Create dynamic contract repositories that reflect operational requirements:

  • Include escalation and de-escalation clauses during contract negotiation and link these to market parameters like foreign exchange & commodity indices.
  • Set a system of alerts and reminders for the specific escalator/de-escalator clauses linked to commodity or Forex indices.
  • Track and measure the compliance and if possible quantify the savings accrued from these contracts.

2. Define, communicate and effectively manage to specified contract metrics:

  • Link contracts to spend to establish parameters of measurement.
  • Establish benchmark parameters with regards to peers and industry.
  • Track and measure contract compliance and utilization based on these parameters and benchmarks.
  • Communicate and elicit input from concerned decision makers while determining parameters.

3. Institute regular contract audits and use them to create opportunities:

 Improve visibility in the following areas;

  • Currency Change and Conversion.
  • Volume Discounts.
  • Buyer Turnover.
  • Clerical Errors.
  • Carryover provision for Replacement Contracts.

4. Standardize and accelerate contract authoring by maintaining a contract template and clause library:

  • Define mandatory / non mandatory clauses.
  • Define templates and clauses based on geographies and categories.
  • Ensure continuous updates to all clauses and ensure access to relevant stakeholders to modify templates.

5. Create a standard workflow for collaborative authoring and negotiation of contracts:

  • Create a standard work flow with set protocols and procedures.
  • Define hierarchies for approval process.
  • Ensure access to all necessary stakeholders during the contract authoring and amendment process.

To download this piece on contract management click here

About "" Has 33 Posts

Rohitkumar Nair is Sr. Manager Marketing at Zycus, a leading provider of Procurement Performance Solutions.

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