Contract Management 101: The Best Contract Management Systems
Sourcing and contract management is one of the biggest pieces of the puzzle when it comes to procurement, and managing your contract management system well is important. Now that most procurement systems are automated, the most common way to manage contracts is by using procurement contract management software to keep everything organized and collaborative so that your team has access to key contract metadata and dates on the contract management dashboard as well.
However, you always want to be sure that you’re using the best contract management systems for your needs, with features that will benefit your company. Read on to learn more about the requirements for a contract management system, what you should look for in contract management tools, and what the best contract management systems for you may be.
The Best Contract Management Systems: What Is the Contract Management Procurement Process?
The lifecycle of a contract typically takes on the same ideals. There may occasionally be variances, but contract management goals and objectives are fairly consistent across companies and industries. Generally, the life of a contract looks like this:
- Contract initiation. At this point, you’re defining your business objectives and getting prepared to gauge interest in your suppliers.
- Contract authoring. Once you’ve completed the sourcing process, gauged interest and have settled on a supplier, you will author a contract.
- Negotiations. It’s rare that a contract will be agreed upon on the first pass, so you and the supplier will often go back and forth and negotiate (i.e. the redline process).
- Approval and execution. Once everything is approved, the contract can be executed by both parties.
- Obligation. Once the contract is signed, it’s vital to ensure that both parties maintain their end of the bargain.
- Auditing. Once everything has concluded, at some point, this contract will be a part of your auditing and reporting process, at which point you can gauge whether you want to do business with this vendor again.
- Termination or renewal. After you’ve decided on the vendor, you then utilize their goods or services for a period of time before you decide if you will work with them again or terminate the relationship.
If you were doing all of these processes by hand or through email, it can take forever, which is why you need one of the best contract management systems to help you streamline the process. There are features of contract management systems to help you with each step of the contract.
The Best Contract Management Systems: How to Find the Best Contract Management Tool
There are certain features that the best contract management systems should have when you’re looking at implementing a contract management system. There are certain features you would look for that would match each phase of the contract’s lifecycle.
For instance, when it comes to contract initiation, you want a vendor contract management system with robust templates that will allow you to draw up the right type of contract easily and quickly. When you’re authoring the contract, you want to be able to easily drag and drop in phrases and words without having to write the whole thing from scratch. For negotiations, software with a side-by-side comparison is ideal.
A key component of any contract management solution is a database or repository of all of your contracts so that users can easily view contracts or find a specific one at any given time. Most repositories will also alert you in advance of any upcoming important contract dates like expiration, termination, or rollover.
Another must-have is keeping a vendor database, which is a very important part of contract management in procurement. Not only does this help you build stronger relationships with your preferred vendors, but it also lets you terminate relationships with ones that perform poorly.
Also, the best contract management system for your organization could be contract management RFP software, which specializes mainly in Request for Proposals (RFPs), as well as other RFx functions. However, it typically isn’t full supplier contract management software.
To learn more about the best contract management systems or to request a contract management software demo, contact us today at EC Sourcing Group at 973-936-9672. We want to help change the way you think about procurement.