Optimising Procurement Contract Management Through Visibility and Automation

Effective contract management is central to successful procurement. It streamlines processes, strengthens vendor relationships, mitigates risks, and delivers tangible cost savings.

In a globalised supply chain, procurement professionals need to efficiently manage contracts from creation to renewal or termination, all while supporting the business’s wider strategy.

At its core, contract management in procurement ensures that organisations get the best value from their vendor agreements. Well-structured contracts establish clear expectations, protect all parties, and create a foundation for productive collaboration.

Only when procurement teams have visibility and control of contract terms, obligation fulfilment, and performance metrics can they optimise spending, minimise risks, and foster mutually beneficial partnerships with vendors.

In this article, we’ll explore:

• Common Procurement Contract Management Challenges
• The Role of Vendor and Contract Lifecycle Management (VCLM) 
• Best Practices for Improving Visibility and Contract Automation in Procurement
• How Procurement Teams Succeed with Gatekeeper

Common Procurement Contract Management Challenges

Procurement professionals face a range of challenges when managing contracts. The contract lifecycle encompasses various stages - from initiation and negotiation to execution, monitoring, and renewal or termination - each requiring input from multiple stakeholders on numerous documents, which can lead to intricate approval workflows.

Manual processes amplify these complexities. Spreadsheets, email trails, and physical file storage are time-consuming and prone to errors. Misplaced documents, inconsistent templates, and missed deadlines can lead to compliance issues and financial losses.

A lack of standardised contract management processes, teams working in silos, and a lack of centralised storage for agreements makes it increasingly difficult to maintain visibility and control over every aspect of the contract.

Procurement teams are likely to experience:

• Difficulty tracking critical dates: Without robust systems in place, procurement teams often struggle to stay on top of important milestones such as contract deadlines, renewal dates, and expiration dates. This can result in costly consequences, including automatic renewals that lock organisations into unfavourable terms, service disruptions that affect business continuity, and compliance violations that carry financial penalties and reputational damage.
• Version control issues: Multiple versions of contracts often circulate among stakeholders, creating confusion and misalignment. This lack of control over document versions increases the risk of poor obligation fulfilment, contract breaches, and disputes. It also makes it harder for teams to ensure they are working with the most accurate and up-to-date version of an agreement.
• Vendor relationship challenges: When contracts lack consistency, vendors may encounter disparate terms and conditions across agreements. This can create misunderstandings and confusion, potentially damaging relationships and hindering collaboration. Misaligned expectations and unclear terms can further erode trust and impede long-term partnerships.
• Delayed time-to-contract: Inefficient processes and disjointed workflows can significantly slow down the contract lifecycle. This delays the time it takes to finalise agreements, which may result in lost business opportunities, delayed projects, and strained vendor negotiations.
• Increased risk exposure: The absence of standardised processes makes it more difficult to assess and manage risks effectively. Contracts may omit critical clauses or fail to account for regulatory compliance, leaving organisations vulnerable to legal and financial repercussions.
• Operational inefficiencies: Manual processes and siloed teams lead to time-consuming, error-prone workflows that drain resources. The lack of integration between departments further exacerbates delays and complicates cross-functional collaboration, ultimately leading to revenue loss.

The Role of Vendor and Contract Lifecycle Management (VCLM) Approaches in Procurement

Effective procurement doesn’t stop at managing contracts - it also requires seamless oversight of vendor relationships and the mitigation of third-party risks.

Vendor and Contract Lifecycle Management (VCLM) is a holistic approach that addresses these interconnected aspects, providing organisations with the tools to ensure compliance, enhance efficiency, and maintain strong partnerships across their supply chain.

At its core, VCLM unites three critical areas:

• Contract Management: Streamlines the entire contract lifecycle, from creation and negotiation to execution and renewal. By automating workflows and ensuring visibility, organisations can reduce errors, stay on top of deadlines, and maximise the value of their agreements.
• Vendor Management: Provides a centralised platform for tracking vendor performance, compliance, and key data. By fostering transparency and collaboration, VCLM helps organisations strengthen vendor relationships and ensure service quality aligns with expectations.
• Third-Party Risk Management: Proactively identifies and mitigates risks associated with third-party vendors. This includes tracking compliance with data privacy laws, regulatory standards, and other contractual obligations that could pose legal or financial risks to the organisation.

By integrating these processes into one cohesive system, VCLM enables procurement teams to:

• Achieve complete visibility over all contracts, vendors, and associated risks.
• Streamline operations, reducing inefficiencies caused by disjointed systems.
• Proactively manage risks to safeguard compliance and protect the organisation’s reputation.

In a world where supply chains are increasingly complex and regulated, adopting a VCLM framework empowers organisations to drive efficiency, mitigate risks, and unlock the full potential of their procurement contract management strategies.

Best Practices for Procurement Automation and Increased Visibility

Effective procurement contract management requires a structured approach, supported by technology, that prioritises visibility, control, and compliance.

By adopting the following best practices, your organisation can overcome common challenges and ensure its contract management processes are efficient, secure, and aligned with business goals:

1. Centralise Contract Storage: Implement a secure, cloud-based repository for all contracts. Ensure the repository is easily accessible, well-organised, and equipped with advanced search capabilities to quickly locate key agreements and terms.
2. Automate Key Processes: Use automation for repetitive tasks such as setting alerts for critical dates, routing approvals, and tracking contract milestones. Automated workflows help standardise processes and minimise human error.
3. Standardise Templates and Clauses: Develop a library of pre-approved templates and clauses. Standardised documentation ensures uniformity across contracts, reduces drafting time, and supports compliance with legal and regulatory requirements.
4. Empower Vendors with Self-Service: Adopt a self-service portal that allow vendors to input and update their due diligence information directly within a secure platform. This speeds up onboarding, fosters a relationship of trust, and ensures data accuracy without increasing internal admin for procurement teams.
5. Implement Robust Compliance Measures: Regularly review contracts to ensure they meet current regulatory standards. Leverage contract management solutions that monitor compliance obligations, third-party risk, and generate audit trails to ensure transparency.
6. Monitor Vendor Performance: Track vendor performance against key metrics. Implement vendor scorecards to systematically evaluate and track performance. Use key metrics such as delivery timelines, quality standards, compliance adherence, and cost efficiency to create a comprehensive performance overview.
7. Regularly Audit and Optimise Processes: Conduct regular audits of your contract management processes to identify inefficiencies and areas for improvement. Use insights from these audits to refine procurement workflows, update templates, and adjust strategies as needed.
8. Conduct Post-Contract Reviews and Share Learnings: Perform post-contract reviews to evaluate outcomes, identify lessons learned, and use this information to improve future procurement processes.

Watch our interview with Hannah MacDonald, Head of Procurement and Supplier Operations Lead at Monzo Bank, to see how regulated businesses are automating procurement.  

How Procurement Teams Succeed with Gatekeeper

Police Bank, a financial institution in New South Wales, Australia, struggled with a time-consuming and inefficient vendor onboarding process. Their challenges included manual processes prone to errors, difficulty maintaining compliance with regulatory standards, and limited visibility into vendor data.

To address these issues, they introduced automation and increased visibility into their processes. By doing so, Police Bank streamlined its vendor onboarding workflow, ensuring a seamless and consistent approach. They also gained better control over compliance requirements and improved access to vendor information, enabling stronger relationships and faster decision-making.

The system is responsive, intuitive, and very easy to use. It’s also highly configurable meaning we can adapt the workflow modules to cater for changes in outsourcing standards or regulatory requirements." - Len O'Hanlon, Procurement Manager

As a result, Police Bank not only saved time but also enhanced its operational efficiency, ensuring a higher standard of compliance and improved vendor engagement. This transformation highlighted the critical role of technology in modern vendor management.

Wrap Up

Effective procurement contract management is crucial for organisations to streamline operations, mitigate risks, and foster strong vendor relationships.

Take the first step towards transforming your procurement operations by exploring how technology can streamline your contract management processes, improve visibility, maintain control, and ultimately safeguard compliance.

Book a demo today.