Contract management screenshot

Hot Topic: Technology in procurement

The use of technology in procurement can be highly beneficial when the correct solution is implemented.

Before deciding what sort of procurement technology to purchase, it’s important to consider:

  • What are your specific business requirements?
  • What do you think is the best solution?
  • How will the technology be successfully implemented into your business?

At Ebit, we have worked with plenty of businesses and witnessed expensive, all-singing, all-dancing systems that are not being fully utilised to best effect, or in some cases not being used at all. As a result, we suggest this simple three step process to get it right.

  1. Requirements

It’s important to start by developing a specification or set of requirements. Consider what you need, what purpose it will serve, what problem it solves, who will use it, and your budget.  Think not just about ‘the now’, but also how those requirements might change over the next few years.  Reviewing potential solutions can prove a valuable way to help draft these requirements, whilst engaging with key stakeholders for their input at this early stage will help when you implement a system later in the process.

There are multiple procurement systems available on the market.  SRM systems provide the technology to automate many aspects of the procurement process but can come with a heavy price tag.  Data systems are on the rise and can prove a powerful partner, providing anything from analysis tools to offering a fast-track to factory and CSR audit completion.

  1. Solution

Once you have identified your requirements you can then seek to identify the best solution.  Do you want a solution that already exists, would you prefer to have a custom solution built, do you already have the solution?  Think about the best way to meet your specification.  Ideally, stick to your set of requirements and don’t stray. Also, try to keep the solution as simple as you can – having a solution developed will likely mean ongoing maintenance costs. A complicated solution could mean that it doesn’t get used.  User engagement is key to any system so sticking to your requirements and finding the correct solution for your business will greatly enhance this.

  1. Implementation

Once you have your solution identified then you need to implement it.  This is a really important step – get it wrong and people will not engage with the technology, and you don’t want to end up with a white elephant.  Formulate a plan and engage with stakeholders so that you take them on the implementation journey and they are immersed from the outset. Consider any training requirements and identify what happens if things go wrong.

An example of how Ebit can help:

Here at Ebit we help businesses save money and a big part of that is reviewing business contracts.  One of the challenges over the years has been contract management.  It’s not uncommon for us to start working with a client and ask for copies of contracts only to find that they a) don’t exist, b) are scattered across the business, or c) sit with suppliers.

We also find that many businesses don’t want to spend considerable sums of money on a complicated contract management system or engage in lengthy training if they load just a few contracts each year.

Contract management is so important too.  These contracts set out the terms of engagement with a company’s suppliers, who are vital to the running of any business. Not having visibility of contract terms, SLA’s and KPI’s is a big risk.  We also find that poor contract visibility means that contracts can renew automatically without warning, or price increases kick in unexpectedly so there are lots of reasons to get it right.

In fact, our experience showed us that contract management is a potential area of improvement for most businesses. Existing solutions did not fit our client base’s set of requirements, so we built our own contract management system which is cloud based, very simple to use and enables businesses to store all their contracts electronically and then receive alerts when action is required.  We developed the system by working very closely with a number of our clients who were frustrated with current systems and processes.  It’s proved a highly effective procurement system which gives businesses visibility of their contracts, supports procurement category planning and stops auto renewals. Importantly, use of our contract management system allows for time to properly negotiate ahead of a contract end date.

Effective contract management. Supplier contracts: where are they stored? When do they expire? Are they compliant? Can you provide a detailed audit trail? Could our software help?

If you would like to find out more about our contract management system, we would be happy to help. Contact us to find out more.

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