We started with Procurement Performance Elevation series to explore the different facets of procurement technology in the source-to-pay process. It confers on the driving forces, implementation practices & benefits of different procurement solutions like contract management, eSourcing, etc.
With this new blog series we will focus on the contract management solution.
Learn More: Zycus iContract Solution
Even as the global economy is struggling to recover from the 2008 recession, we are now struggling to fight yet another battle: To manage spends and control costs as that gets more difficult in such a business environment. Even so, there are many things that procurement can do to help them meet their savings expectations, such as Contract Management.
When sourcing ends – contract management begins. It guides procurement through purchasing of the commodities and/or services at the negotiated prices, agreed upon service levels, and any concession or commitments made by the supplier.
With multiple contracts at different locations, technology helps procurement manage contracts effectively. Combined with in-depth analysis and reporting capabilities, contracting technology can deliver real value to the organization by ensuring better contract compliance.
Best-in-class organizations, that leverage contract life-cycle management solutions, identify opportunities for savings and prevent inefficiencies. As per an Aberdeen Group 2011 study, three performance criteria used to distinguish top performers in this benchmark were:
- 79% have their spend under management (compared to 45% for laggards)
- 17% average contract savings realized (compared to 4% for laggards)
- 8 days average cycle time for contract review and approval (compared to 47 days for laggards)
Stay tuned as we talk about the driving forces for contract management.
To read part 1 of the Procurement Performance Elevation series, The Why, What and How of Supplier Management