Supply chain management has to deal with the full lifecycle of the processes that need to be completed within the procurement and contracts division of an organisation. Let’s look at the five key attributes of this process.
1. Understanding customer requirements
Drawing up requirements specifications is often a lengthy business. When the requirements need to be translated into procurement actions, supply chain management software kicks in to track the fulfilment of the business customer’s requirements.
2. Contract registry through management software
A contract management system will help to register, track and manage contracts that are set up as part of a procurement supply chain. It will hold all the details that the organisation needs to know about every contract – the manager responsible, the contracting party, the dates, payment stages, terms, purchase orders, called-off amounts, related documents, and anything else that will help to manage the contract.
3. Purchase order management
Purchase orders against a large contract can be for many different items; however, large enterprise systems such as SAP often do not provide enough detail for managers to track expenditure on specific items. A contract management system, on the other hand, will enable managers to focus on these specific call-offs and what they were for, simplifying budget tracking.
4. Managing the supplier relationship
Meetings and interactions can be tracked, with the software frequently enabling performance tracking against the agreed targets in the service level agreement (SLA). This simplifies the management of an underperforming supplier, as evidence is readily available.
5. Warehouse or pipeline management
Where a business has a warehouse, contracts and their supplied goods can be tied to inventory and dates for contract renewals. Where the business uses services, it may want to know how many costed projects are in the pipeline, what their total spend will be, and how many of these have active contracts against them.
Supply chains can have many non-linear and interwoven relationships. Contract management requirements can vary greatly with the type of business; therefore, it is advisable to use software from a supplier such as Contracts Wise that has plenty of experience across diverse organisations and sectors.
Contracts can be a complicated mess managed via multiple spreadsheets, or a well-managed, integrated and auditable aspect of the business through the use of contract management software.