The risk of Contract Lifecycle Management with Manufacturing and Engineering Industry.
Sept 10, 2019 By Prasad Varade
Manufacturing and Engineering industry faces large and ever increasing number of contracts and the changing regulatory environment increase the risk of compliance with contract management. With fluctuating market demands and rapidly evolving competition even a small delay in contract lifecycle management process can introduce delay in deals and this may cause loss of revenue or missed opportunity.
The key to successfully closing deals is to keep the contract process moving. The faster you can close a contract, the quicker you can move on to the next deal, which ultimately leads to more opportunities and revenue for the company.
In order to stay competitive the Manufacturing and Engineering companies need to become more agile and stay close to both your customers and suppliers. And at the core what connects you with them is contract. Because contract defines the terms, deliverables and business relationship between you and customer and suppliers.
Contract Management is no longer about creating a document and then burying it in an electronic cabinet. CLM today is focused on breathing life into the contract and making sure that the full value embedded in the contract is realized by both the buyer and the supplier. CLM is not restricted to just managing the contract document, but it now extends to managing all aspects of the contractual relationship throughout its lifecycle - contract, performance, financial, relationship and compliance management.
1. Slow contract creation and approval introduce delay to close the deal.
2. Missed renewals and expiries dates.
3. Tracking regulatory compliances, obligations and risk associated with contracts.
4. Missed cost saving opportunities due to lack of visibility into all procurement contract.
5. Revenue leakage due to poor contract governance and performance monitoring.
6. Losing contracts or associated documents due to broken links, file renaming, indiscriminate filing, or employees leaving.
Automate Contract Life-Cycle:
CLM solution will automate different stages of contract life-cycle from drafting the contract to get it reviewed, approved and signed through the integrated electronic signature technology. CLM solution gives you the clear picture of contract current status and if it stuck somewhere then why and with whom. It reduce the contract lifecycle time by 80% and get the deal closed faster.
Real-time visibility and tracking:
It is important for sales teams to manage contracts not just during the authoring, reviewing and sign-off stages but also post sign-off. Integrated contract lifecycle management systems provide a real-time view of all key contract information in the form of a dashboard. All approaching deadlines and other key data enabling sales ops teams to take necessary steps on time. Sales operations are also alerted with triggers and reminders of any renewals ensuring ample time for negotiation.
Monitoring cost saving opportunities:
Contract management tool gives a holistic view of all buy side contracts as well with sales side contracts so the respective contract owner can identify re-negotiation opportunities and unwanted contract renewals which can be terminated to save organization contract.
Streamline contract performance monitoring with periodic review:
This is another crucial, and often overlooked part of the contract management process, particularly if you dont have dedicated CLM staff to oversee the process. Tracking the performance of contracts to ensure maximum returns is crucial for all organizations. With CLM solution you can set performance monitoring task and milestones for contracts and receive notification when the event triggered and make sure the agreed deadlines are meets and terms and conditions are followed.
Compliance and Risk management framework:
Contracts come with a large number of complex regulations and obligations and any breach of these could lead to heavy financial and reputational losses. These state, national, and federal regulations change and update all the time and the same needs to reflect in the contracts to stay compliant. This makes monitoring contracts to ensure full compliance a necessity across a contracts lifecycle. Reviewing hundreds of contracts for compliance is next to impossible if handled manually but equally hassle-free with Contract Management Solution.
Centralised repository for all contracts:
Data is truly the bloodline of Manufacturing and Engineering Industry and Centralization is the backbone of your contract management process, supporting and enabling all the other areas of contract management. Without a centralized location for documents and data, important functions such as reporting, audits and analysis become nearly impossible. CLM software enables you to establish a centralized electronic repository for all of your contracts, making them easy to manage and enable you to filter out the contracts the way you want.
Good Contract Development and Management could improve profitability by the equivalent of massive 9% of annual revenue.
- International Association for Contract & Commercial Management (IACCM)
Outsourcing suppliers found that without close contract governance, businesses stand to lose up to 40% of a contracts value.
- A KPMG Survey
65% of Legal professionals identify time lost on administrative tasks as their biggest pain point according to a global legal servey.