Contract Management is the process of handling contracts from vendors, partners, customers or employees. The business world is changing. New ways of driving revenue are forcing companies to create the way they manage the customer life-cycle- making contract management more important than ever before.
Contract management can be an asset or a liability, it depends on how digital and integrated one’s process is!
In order to get a hold of this concept more clearly and in more holistic way, let’s dive into it! Category management activities can be broadly grouped into three areas-
- Delivery Management
- Relationship Management
- Contract Administration
Delivery Management ensures that whatever is ordered, gets delivered in the conformance with the contract in terms of quality and performance. Delivery management may include checking with the nature, quality and quantity of:
- goods supplied
- works carried out
- services provided
Relationship Management seeks to maintain the healthy relationship between the Vendor and the Contracting Authority with the aim of resolving or easing tensions while identifying opportunities for improvement. Relationships must be entirely professional throughout the cycle.
Contract Administration covers the formal governance of the contract and any permitted changes to documentation during the life of contract.
Challenges of Contract Management
- Manual contract management introduces bottlenecks into the sales cycle
When the contract has to be managed manually, the contract management gets bottle-necked.
- Manual contract management introduces manual errors
If the legal team will not catch mistakes, then the following errors may occur
- Non compliance
- Revenue leakage
- Extended sales cycle times
- Jeopardized customer relationships
Contracts endure at the heart of B2B Commerce, as they are the physical representation of the customer relationship
PS: When you manage the relationship properly, you reap a variety of benefits.