Procurement managers deal with contracts continually as contracts govern the selection of vendors who provide the materials for the day to day operations of a company or organization. Procurement managers are often in charge of oversight of entire supply chains and the purchase negotiation process.
AI-driven contract management software simplifies the procurement process greatly. Procurement contracts, depending on the size of the company, can involve thousands of pages of active contracts at any given time.
An efficient procurement process is necessary for the financial viability of a company. A reliable supply chain and a strong relationship with vendors make it possible to stay competitive in today’s fast-paced economy. Procurement specialists and managers work to ensure reasonable prices on the goods and services that sustain the company’s production process. A contract management system is necessary to support procurement efforts.
How contract management software supports procurement management
- Making data easier to find—Data is a valuable asset in any company. The information you have in your contracts about customers, vendors, employees, and your operational capabilities is critical to the success of your company.
Without a way to easily organize, or mine, this data you risk missing valuable opportunities to extract data and analytics from your existing information. Procurement contract management software serves as a central repository to make all relevant data easy to access.
Most contract management software is cloud-based, and automatically keeps your contracts organized in a single centralized space. AI-driven technology allows you to find what you need by keyword, file name, or dates in seconds.
- Keeping your information secure—Security is a primary concern across many industries today. Contracts contain a wealth of information about a business, and, in the wrong hands, that information could do irreparable damage to a company. Contract management software addresses data security concerns by keeping your contracts safe in one central repository. Access can be granted to anyone who needs access and denied to those who do not. Controlled access not only protects you from outside data breaches, but it also offers a level of protection from corporate or industrial espionage.
- Risk management—Procurement management and contract management function together to identify and mitigate risk. Contract management software is a potent risk mitigation tool. The software helps to identify risks, set alerts for deadlines and expiring contracts, and some contract management software can even identify non-standard clauses in contracts.
Companies that use contract management software with artificial intelligence have a lower risk profile. The software identifies contract compliance issues and can give you access to sophisticated analytics regarding what works and what doesn’t in contracts. The analytics can also identify supply chain issues, letting you make smarter procurement decisions.
Automatically generated reports can be run at any time and provide insights that once were only revealed in annual or quarterly audits. Contract management software serves procurement well. Answers to questions about vendor contracts and supply chain issues can be answered instantly with just a short query search.
- Efficiently audit your system at any time—Regular audits help you find problems in the system and improve procurement management. Before contract management software, audits were time-consuming and labor-intensive. With a sound contract management system, all relevant documents are easily located, making audits less painful.
Manual, paper-intensive procurement practices lead to chaos and confusion in the procurement process. Manual document management leads to high labor costs, lost and misplaced documents, a sluggish approval process, and missed discounts. Saving money upfront by not investing in document management software costs money on the backend.
Poor contract management can damage essential relationships in procurement, or, lead to missed deadlines and broken contracts. Damaged relationships and possible damage to the reputation of a company has costs that are significant but impossible to track. Human error is inevitable in an environment that depends on reams of paper and manual tracking of numerous contracts. It is hard to put a numerical value on the reputation of a company, so why risk it when contract management software saves money and protects your reputation in the long run?