Keeping close tabs on your supply chain processes and procedures creates significant benefits for any business interested in mitigating risk, reducing spending, and increasing operational efficiency. Managing the vendors that your team hires to supply goods and services for your organization is at the center of this task, and that all starts with the contracts that govern those relationships.
Reporting on the performance of your contracts allows supply chain teams to increase visibility and transparency into your contract portfolio, identify strengths, weaknesses, and other trends in your contract management process, and deliver these insights to stakeholders throughout the company.
Generally speaking, contract reporting can help you better understand your contract portfolio and allow you to
Identify trends from previous contracts to shape the way future contracts are structured
Determine which vendor relationships are fruitful and should be expanded and which should be reevaluated
Measure performance and identify changes to optimize your processes
Here are some of the specific ways contract reporting can improve supply chain performance.
Controlling and reducing supply chain risk is one of the most important benefits of contract reporting. By establishing the appropriate contract management key performance indicators (KPIs), you can identify things like
Underperforming vendors or types of contracts
Specific geographic regions that are underperforming or not delivering as expected
Whether your supply chain is too reliant on any country or region
Specific language relating to vendors and their partners and subcontractors
With this information now available, you can take the corrective action necessary to fix issues in your procurement contracts before they turn into significant problems for your organization.
Just about every business would jump at the opportunity to cut back on spending, and contract reporting allows procurement teams, contract managers, and others to illuminate these opportunities based on the information contained in supplier agreements. Reviewing key contract details around contract values and payment terms and structure can help you find ways to save money by determining
Whether any of your contracts can be fulfilled by a different supplier at a lower price point
If there are any upcoming opportunities to renegotiate agreements at a lower cost
If restructuring or replacing an agreement with a fixed price contract would expose your business to less financial risk
Finding ways to reduce spending can be a complex project, but having a solid understanding of your contract portfolio, including the structure, value, and flexibility to make changes to your agreements is a good starting point.
Increasing process efficiency is another primary goal of nearly every supply chain team, and can also significantly reduce spending along the way. Reporting on various contract related performance indicators will give you a better understanding of where your process is running smoothly and where it’s getting hung up on things like
Bottlenecks in the signing process or in the production and delivery of goods
Vendors that aren’t meeting the agreed upon lead time to produce materials
Manual purchasing processes that can be automated to save time
The ability to pinpoint and optimize even minor weaknesses in your procurement process has the potential to create substantial time and financial savings for your business.
How Contract Management Software Can Help
Contract reporting can be carried out numerous ways, but the process is undoubtedly simplified when all of your agreements are stored and organized in a central repository.
If your contracts are scattered across various filing cabinets, email inboxes, and shared drives, the process of tracking down all of your agreements, extracting data from those documents, and compiling into a meaningful, actionable format can become an overwhelmingly complex project. This task requires a great deal of manual, tedious work and additional tools and solutions to actually create the reports.
On the other hand, the custom reporting features found in many contract management solutions enable users to easily create reports based on any of the contract metadata tagged within the software. These reports can then be automatically generated on a recurring basis and delivered to any stakeholders across your organization who want greater visibility into the procurement process and performance of your supply chain vendors.
Those involved in the procurement process are busier than ever trying to solve new problems and adapt to new ways of working with both internal teams and external supply chain vendors. Taking advantage of contract management software to store agreements and easily report on the important details found in those agreements can save you considerable time and effort while delivering key insights that enable you to optimize your supply chain processes.