A contract involves more than just signing and getting on with things. Good contract management involves proper monitoring of the whole process to make sure that everyone delivers their end of the bargain. A big determiner of success in a contract is a fruitful relationship between the buyer and supplier. You’ll have a better chance of renewing a deal when you’re in good terms with your supplier.
The first step to having a better relationship with your supplier is to understand the contract management life cycle. This doesn’t just apply to manual methods. Automated contract management applications from ServiceNow can be used to their fullest potential when you’re knowledgeable of the process.
Request
A procurement contract starts with a request. An employee lays down the reasons behind the need to procure a particular product or service. Relevant documents often support this. The initial request is where you establish your goals and expectations for the contract.
Authoring
Once you and your supplier have agreed on the terms, write a contract with your company attorney. For an automated management system, it’s as easy as filling out a form and clicking OK.
Negotiation
The next step is to meet and negotiate with your supplier about the contract. This is inevitable, despite preliminary efforts to set goals and expectations. Expect revisions.
Approval and Execution
Once you’ve come to an agreement with your supplier about the terms of the contract. You must submit it to management for approval. Once it’s approved and signed, the exchange of goods and services can begin.
Follow-up and Auditing
It’s important to keep track of the deliverables you’re receiving from your supplier. This part is where you should manage your relationship with them carefully. If they’re missing out on deadlines, follow up on them. Set an example by always keeping your end of the bargain on time and keeping records for auditing.
Renewal
When your contract management process goes smoothly, you’re more inclined to renew or create new contracts with your supplier. Continuing this relationship is beneficial for both you and your supplier. It provides a consistent supply of resources on your end and income on theirs.
A clean contract management process will ensure that every procurement partnership you form will be transparent. This is especially true for automated contract management methods. Every deliverable and payment is tracked in the cloud. Some applications even offer performance analysis, with data about fulfillment readily available with a few clicks. This is why more and more companies are migrating to automated methods to run their business.
Despite its challenges, contract management is still an integral part of every business. You should see every step of its process as a way to create a stable relationship with your supplier. It can often be difficult and time-consuming, especially if there are delays in approval. Even if you don’t get a chance to renew your contracts with your partner, it’s still worth the effort. Even when a partnership with your supplier doesn’t work out, you’ll be confident in knowing your contracts were followed through responsibly and with integrity.
