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 honored, 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, take 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

• Standardize 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 organization the advantage of receiving contracted goods and services sooner, ensuring 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.