Top Tips: Contract Management
Many supply chains have been impacted by recent global events and procurement teams are pushing to find new ways to manage these challenges. Supplier relationships are a key element to this and ensuring you have oversight of your contracts is vital when managing these relationships.
At Ebit, we work with many businesses and specialise in helping them reduce costs and get the best out of their supplier relationships. We thought it might help to share some of our top tips with you around the subject of contract management.
Do you have an active contract with every supplier?
Without a contract your business is vulnerable to cost disputes, issues with supplier performance, and business continuity could be compromised. Contracts are there to protect your business and with the right flexibility can help you when things change or go wrong.
Who wrote your contracts?
If your contracts are written by your company, great! If they’re written by suppliers, make sure to read through them carefully to check the details. Contracts provided by suppliers are usually weighted in favour of the supplier. Always review a contract before signing to ensure it is right for your business.
Do you know which suppliers make up your top 20?
If you’re not sure, conduct a review so that you can prioritise business-critical suppliers to protect your business. The top 20 is also a good place to start to gain the most impact with any cost reduction or business improvement strategy.
Are any of your contracts due to auto-renew?
If the answer is no, make sure you know when your contracts are due to end and allow enough time to consider retendering without any supply chain disruption. If the answer is yes, it’s worth double-checking the terms in case there are any price increases written in. You should still make sure you know when the auto-renewal is due so that you can consider switching suppliers beforehand if you need to.
Do you know every contract’s end date?
This is vital information that will allow you to plan for a tender process with plenty of time before your current contract ends. If you don’t have this information to hand, consider digitising contract end dates so that you can easily look them up when required.
If you don’t have internal capacity to conduct a review of your supplier contracts, we can help. Our contract management software will take care of contract governance for you. Contact us to find out more.