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3 Manufacturing Contract Management Challenges

Risk & Compliance

The manufacturing industry is one of the economy’s most complex and challenging sectors. Creating finished products from raw materials, which may be sourced from locations around the world, is a massive undertaking that requires a streamlined, well-oiled supply chain.

In order to obtain the necessary labor, materials, technology, and other resources, manufacturing companies need to sign dozens, hundreds, or thousands of contracts that may be active simultaneously. With so many documents to keep track of, how can manufacturing companies keep their contract management workflow efficient and effective?

Below, we’ll discuss three of the top contract management challenges for manufacturing companies—and how you can solve them using dedicated contract lifecycle management software.

1. Managing the supply chain

A reliable supply chain from start to finish is essential for manufacturing companies. However, this task is easier said than done.

Some common problems with the supply chain include:

  • Paying higher prices for fuel, labor, and commodities

  • Adjusting to shifting customer demands and macroeconomic issues

  • Dealing with variable quality from your suppliers

  • Solving complex logistical questions across multiple continents and time zones

For example, raw materials for manufacturing aren’t always available at fixed prices. This means that the cost of doing business can wildly fluctuate based on circumstances and factors entirely out of your control.

The good news is that you can mitigate your supply chain risk by finding reliable vendors and suppliers and signing effective, solid contracts with them. The bad news is that you’ll have to continue to manage these contracts once signed, verifying that they remain an intelligent business decision.

Using a dedicated contract management solution can help you centralize and organize your supply chain contracts and meet critical deadlines. In so doing, you’ll gain more control over your contracts and improve your supply chain performance.

2. Assessing productivity

Even after you’ve signed contracts with the right vendors and suppliers, the contract management process is far from over. For one, you’ll need to accurately assess contract performance to decide if and when to renew these agreements.

Perhaps the most obvious way to determine the productivity of your manufacturing contracts: how much they’re truly costing you. Calculating your contracts’ return on investment, or identifying issues with cost overruns, will help you isolate problems and determine which ones are worth renewing.

Overseeing and analyzing your active contracts is much easier with a dedicated contract management solution. The best contract management software for manufacturing companies has powerful reporting and analytics features, helping you find and resolve problems at a glimpse.

Assessing productivity is important not only for your current contracts, but to perform more accurate business forecasts as well. Contract management software can offer you historical data and insights into your previous contracts. This makes it easier to understand your needs moving forward, and easier to estimate how well you'll be able to meet these needs in the future.

3. Regulatory compliance issues

Compliance and risk management are critical concerns for all manufacturing companies, especially for those that operate in multiple countries, regions, or jurisdictions. The compliance issues that manufacturing companies need to address include:

  • Health and safety regulations

  • Environmental regulations

  • Fair competition and antitrust laws

  • Export controls

  • IT security and privacy concerns

Satisfying this diverse array of compliance issues requires manufacturing companies to stay on top of their contract management workflow.

For example, businesses can massively boost their contract management productivity and efficiency by creating contract templates with standard boilerplate clauses. What’s more, regulations may change on a moment’s notice, forcing you to update the language of your contract templates in order to remain in compliance.


From distribution and licensing contracts to supplier and vendor agreements and more, manufacturing companies have a lot on your plate when it comes to contract management. The three challenges above should never be taken lightly when dealing with manufacturing contracts.

Fortunately, CLM software can make a meaningful impact for manufacturing companies. Through a variety of time-saving features, such as smart document tagging and customizable alerts, you can achieve a level of productivity that simply isn’t possible with paper-based contract management processes.

The Buyer's Guide to Contract Management Software

Quickly identify solutions to your specific contract management challenges.

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