Tracking Contract Obligation Compliance to Improve the Bottom Line Growth

[Manan Pandya]

Your vendors are crucial to your company's success. However, you may not realize how critical it is to manage your connections with them effectively. Procurement used to be just the department in charge of purchasing products and services—nothing more, nothing less. On the other hand, procurement should now be considered part of your overall business plan. Therefore, you should adopt a strategic approach to managing your vendors to get the most bang for your buck. 

Unfortunately, vendor management isn't generally understood or widely implemented in the business world. As a result, many businesses find it difficult to keep track of their contract compliance duties. Such information is frequently hidden deep in the contract documents, and sharing it with the right business personnel at the right time is difficult at scale.

Benefits of Vendor Management

Vendor management enables organizations to generate more value from their vendors by controlling costs, driving delivery excellence, and mitigating risks. An organization can get the following benefits by implementing proper vendor management:

Better Pricing

By implementing appropriate vendor management, your organization can benefit from a more extensive choice of vendors, resulting in more options and ultimately better costs. For example, a bidding war amongst vendors can help your business while ensuring that you get your money's worth.

Better Contract Management

In a multi-vendor environment, the lack of a contract lifecycle management system complicates maintaining contracts, documentation, and other critical information. By implementing a proper CLM, your organization can benefit from a centralized view of the current status of all contracts and other important information, allowing your company to make better decisions and save time.

Better Value

The ultimate purpose of vendor management is to maximize your return on investment. So, when done correctly, implementing a vendor management system can result in long-term savings and improved earnings over time.

Poor Contract Obligation Management

Contract obligations management means ensuring that contracting parties fulfill the contract's commitments. Obligation management is a must to get the full value out of your contracts. Well, Why?

Prevention of Revenue Loss - Average company leaks over 9% of its revenues annually due to contract related issues – IACCM  

Improving off-contract spend – Market average 54% of spend is contract compliant; 66% transactions are contract compliant – Ardent Partners 

Tracking of Compliance – Only 29% of organizations regularly collect data on the compliance with standards/scorecards by other part of the business or trading partners - IACCM  

Avoidance of Fraud – 49% of respondents to the PwC Global Economic Crime and Fraud Survey said their companies had been victims of fraud or economic crime, up from 36% in 2016

How To Overcome Challenges in Contract Management

Procurement businesses struggle with managing vendor contracts, obligations, and onboarding processes, exposing themselves to fraud, business and legal risk, and material erosion of value.

Learn how to manage suppliers by adopting AI-driven obligation management and a collaboration portal architecture for critical operations such as onboarding, RFP management, contract collaboration, and visibility of invoice and payment status. This will assist a variety of professionals, including:

• Onboarding specialists and vendor relationship managers responsible for managing vendor relationships and onboarding processes
• Legal and procurement contract professionals, as well as risk and compliance managers, are in charge of managing vendor contracts and performance obligations.
• Procurement and IT managers interested in implementing a self-service model to streamline vendor collaboration
• Accounts payable team working with vendors on invoices and payments.

[Sonal3]

Most organizations face issues with their own onboarding system. Implementing AI-driven obligation management and a vendor collaboration portal framework ensures better vendor management throughout their lifecycle - this sounds interesting! 

[Manan Pandya]

I agree with you. Going from a process-driven to experience-driven employee onboarding is the future. Companies should focus on their people while technology takes care of all the mandatory joining rituals. Also, Ai is going to play a critical role in identifying obligation, and then managing it using workflows is a cakewalk.

[Sandbeck]

Reading the comments above  I am a little in doubt on how much contract management functionality that is available out of the box and to what extent one have engage with good companies such as Aavenir.

Somebody that elaborate on this?