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How contract management works

How contract management works: This ensures that products are delivered as and when they are ordered.

Managing the relationship: Involves strengthening the contact between vendor and purchaser to allow for improved communication throughout the process of contract management.

Managing the contract: The ongoing administration that ensures the day-to-day procurement activities follow what is detailed in the agreement
Seeking improvements: Amendments and alterations are pursued within a procurement environment in order to improve efficiencies and generate an increase in profits.

Ongoing assessment: Procurement activities are assessed continuously to ensure that contracts are honoured, and all purchasing processes have been followed.

Managing change: As part of a long-term procurement relationship, the changes in activities, requirements or products need to be noted and handled effectively.

Managing renewal or termination: When a contract is due for renewal, taking proactive steps to understand whether the contracts should be renewed as is, re-negotiated or terminated, based on future business needs, commercial attractiveness and previous performance by the supplier.

Contract management best practices

  • Standardise contract creation using a set of terms, conditions and legal language that applies to a large subset of contracts.
  • Set contract management KPIs and make your goals transparent to the entire business.
  • Track contract approval time. This allows an organisation the advantage of receiving contracted goods and services sooner, ensures a quicker move towards a positive relationship. Furthermore, the faster responsiveness means the business has an easier time seizing later opportunities.
  • Set automated reminders to alert essential parties to review the document; this eliminates the risk of missing certain addresses in group emails.
  • Make financial metrics a dedicated part of the business’ regular contract management reviews.
  • Conduct regular compliance reviews. Neglecting this responsibility fails to protect the company against the risk of legal, industry and external regulations.

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