Effective procurement and sourcing can have a dramatic and positive effect on any organization. By driving spend under management, managing supplier performance and working to your contracts, businesses benefit from far tighter controls. Managing payment terms is just one example of a key contractual term that can conserve the lifeblood of any business; cash. There are many other terms that are far less visible and rarely tracked that have equally as large an impact to the business.
Tackling the many challenges faced by Chief Procurement Officers and Managers on a day to day basis is fundamental to establishing and maintaining an effective procurement and sourcing function:
- Contract Compliance – do all supplier contracts conform to corporate standards? Are regional or remote offices working outside of the corporate boundaries? Are standard clauses included in all contracts? Are non-standard clauses in use?
- Renewal Management – missing contract renewal dates can be costly; no one wants to miss the opportunity to renegotiate or cancel a procurement contract, avoiding automatic renewals.
- Service Level Management – keeping on top of penalty clauses, not missing the opportunity to claw back expenditure from suppliers failing to meet their obligations, or missing out on other contractual benefits.
- Agreement Clauses – the ability to quickly assess and act upon specific clauses, e.g. during a merger or acquisition, and the right to exercise right of first refusal etc.
- Collaboration with suppliers – working closely with suppliers to ensure best value from contractual engagements; reviewing against milestones and obligations.
- Buyer Churn – personnel come and go, and easing the pain of handover can quickly result in focus being applied to the right areas and tasks.
- Internal Audit and Reporting – having the capability to quickly and easily provide reports and analysis to legal, financial, management teams and the board.
- Workload Management – what is the workload for each buyer, how many relationships do they manage, and how many contracts are they responsible for?
- Procurement and Legal Interaction – manage the business as a tighter team across disciplines creating visibility and compliance for both organizations.
- Time to value with tools – a challenge with any procurement tool deployment, is to load the necessary contractual data to drive the value out of the tool. CLM, ERP, and SRM tools, for example, need the necessary contract data to be effective. Often these tools can take months to deploy with data and are deployed with a small fraction of the data that could truly make them valuable
Central to meeting these procurement and sourcing challenges are the very contracts that sit at the heart of procurement. You cannot manage effectively what you don’t know about. The first step is to ensure there is a clear and comprehensive understanding of the complete procurement contract landscape.
Seal Contract Discovery and Analytics (cDiscovery) quickly locates and identifies contractual documents, extracting key contractual metadata such as contracting parties, contract dates, termination clauses, jurisdiction, right of assignment, right of first refusal, penalty clauses, automatic renewal and much more to aid effective procurement and sourcing.
Contracts are analyzed, providing the clear and comprehensive reporting and analysis upon which informed decisions can be made. Contracts and the extracted data can be managed in Seal or migrated to another system, such as an Enterprise Resource Planning (ERP) platform, a Contract Lifecycle Management (CLM) system or Supplier Relationship Management (SRM) solution.
Whether you have an existing tool or are deploying a new one, Seal can deliver the complex data needed to drive the full value out of your deployment. This expanded data in a fraction of the normal time is of real value to any organization.
Seal can then continue to monitor for new contracts, ensuring new contractual documents are also identified.
Seal can be deployed and operational in a matter of minutes and producing results in just hours, processing potentially tens of thousands of contracts and related documents. Consequently, the payback can be rapid, identifying evergreen contracts and preventing automatic renewal, beneficial clauses that are not being exercised, opening up negotiations for a better deal on discounts structures and speeding up other analytics and reporting functions. These benefits combined with the ability to deploy the data into wider tools give Seal a wide range of use cases in Procurement departments.
Procurement Contracts Health Check
Often procurement professionals will perform detailed reviews and track closely the spend under management. Spend Analysis tools have become popular to gain visibility in this area. This concept is not as widely used for contract management, which is why Seal has developed the Procurement Contracts Health Check which is effectively a Contract Analysis as opposed to Spend Analysis. The process deploys Seal to help procurement professionals understand the real state of their contracts that manage their spend. This health check is beneficial for any procurement organization regardless of whether they are using a CLM or other tool or are starting from scratch. The health check gives an overall point in time picture but can then be deployed ongoing to ensure the appropriate visibility of all contracts coming into the business.