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Premikati contract management

Jul 10

Procurement Contracts

By Procurement No Comments

Procurement contracts are more than mere pieces of paper requiring a signature; they are the bedrock of successful business transactions and play a vital role in procurement.

What is a Procurement Contract?

A procurement contract is an agreement between a buyer and a supplier to manage a project. This agreement obligates the supplier to provide the necessary materials and services at an agreed price, providing the foundation for successful project execution.

The Procurement Process: More Than Just Buying

The procurement process often starts with the buyer, who must determine whether a potential supplier can meet their needs. Through this process, the most suitable supplier for a project is selected, helping to minimize procurement fraud and misunderstandings down the line.

Why Are Procurement Contracts Important?

Procurement contracts are crucial to business transactions. They contain all negotiated terms and conditions, including payment details, a list of orders, delivery schedules, and correction measures. By fostering trust between the buyer and supplier, these contracts safeguard both parties from fraud and misrepresentation, ensuring smooth project management.

Advantages of Procurement Contracts

  1. Transparency: Procurement contracts establish transparency between the buyer and supplier, preventing deception and building a solid relationship. Full disclosure of prices and receipts strengthens the bond between both parties.
  2. Clarity: With everything stipulated in the contract, misunderstandings are minimized. Both the buyer and supplier understand their obligations, promoting cooperation and diligence in their performance.
  3. Legal Protection: Both parties are liable to perform their duties under the contract. Legal actions can be taken against a party that intends to defraud, providing safety in every business transaction.

Different Types of Procurement Contracts

  1. Fixed-price Contract: This is the most common type of contract used in business transactions. Regardless of any internal or external factors, the price set during the signing of the contract remains constant until the project ends.
  2. Cost-reimbursement Contracts: Here, the buyer agrees to pay the supplier for the direct and indirect costs of the project. The supplier only gets paid once the expenses have been validated, placing much of the risk on the supplier’s side.
  3. Time and Materials Contract: This type of contract reimburses the vendor for the materials and time spent on a project. It is most commonly used on projects that are not easily quantifiable.

With the rise of technology, procurement processes are becoming increasingly streamlined and data-driven, leading to optimized spending and reduced risk.

Tools like Icertis and SAP Ariba’s Contract Management Software are revolutionizing this space by providing contract intelligence and services that drive compliance, minimize risk, and maximize business impact.

In an ever-evolving business landscape, understanding and leveraging the power of procurement contracts is a vital strategy for any organization, particularly for finance and procurement executives in the midmarket and large enterprise space.

 

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Apr 03

Contract Trends in 2023

By Procurement No Comments

Contract management is a critical aspect of any organization’s operations, and it’s especially important for executives who are responsible for managing the financial health of their organizations. Effective contract management can help you mitigate risk, increase revenue, and reduce costs, but it can also be a complex and time-consuming process. In this post, we’ll explore the top five pain points that businesses like yours face with regard to contract management, and we’ll provide some best-in-class solutions to help address these challenges. 

 

Lack of visibility into contract terms and obligations 

 

One of the biggest challenges with regard to contract management is the lack of visibility into contract terms and obligations. This can result in missed opportunities to save money, increase revenue, or mitigate risk.

Best-in-class solutions for this challenge include contract lifecycle management (CLM) software that centralizes all contracts in a single repository and provides advanced search and reporting capabilities. With CLM software, you and your team can easily access all contract data, including key terms, obligations, and milestones, and they can quickly generate reports to help them make informed decisions. 

According to a report by the International Association for Contract and Commercial Management (IACCM), companies implementing CLM software can reduce contract cycle times by 50% and increase compliance by 80%. 

 

Inefficient contract creation and negotiation processes 

 

Creating and negotiating contracts can be a time-consuming and inefficient process, especially when done manually.

Best-in-class solutions for this challenge include contract authoring software that streamlines the contract creation process and automates workflows – which can easily help you create contracts using pre-approved templates and standardized language, and automate workflows to ensure that contracts are reviewed and approved in a timely manner. 

 A study by Aberdeen Group found that companies that use contract authoring software can reduce contract cycle times by 50% and increase contract accuracy by 90%. 

 

Poor contract management workflow and process 

 

Inefficient workflows and processes for managing contracts can lead to delays, missed deadlines, and increased risk. CLM software can easily manage contract workflows and approvals, as well as receive automated alerts for key contract milestones and renewal dates. 

According to a report by the IACCM, companies that implement CLM software can reduce cycle times by up to 50%, increase compliance by up to 80%, and reduce legal costs by up to 30%. 

 

Poor contract compliance and governance

 

According to a study by Forrester, companies that use CLM software can reduce legal costs by up to 30% and increase compliance by up to 70%. 

While contract compliance and governance can be a complex and time-consuming process. Best-in-class solutions for this challenge include CLM software that provides automated compliance and governance workflows, as well as real-time alerts for non-compliant activities. 

 

Limited scalability and flexibility 

 

Scalability is a concern for any growing business.  Solutions like SAP Ariba CLM or ICertis CLM software provide scalability and flexibility, as well as customizable workflows and integrations with other business systems. These will ensure your contract management processes can adapt to changing needs, reducing risk and increasing efficiency. 

 

To learn more about:

Contract management and its impact on procurement click here. 

Complex contract management solutions click here.

 

Feb 16

Five Ways to Ensure your Sourcing Strategy Never Disrupts the Supply Chain

By Blog No Comments

Because sourcing is at the heart of any procurement strategy, it is critical to the success of your supply chain.

Poor sourcing strategies have a negative impact on the supply chain such as  downtime, low inventory, and a lack of supply chain transparency.

Here are five things you can do to protect your supply chain from disruptions:

1. Assemble the Right Team

It goes without saying that your supply chain requires people to function. More importantly, it requires the right people.

Consider the following when assembling your sourcing team; such as the ability to quickly learn, analyze large amounts of data, build long-term relationships, communicate, and negotiate.

2. Provide the Right Tools

In today’s supply chain climate, your productivity depends on the tools you make available to your team and the tools and solutions they have at hand can make all the difference.

With emerging technologies across the globe, the supply chain has never had the potential to be more efficient. 

A great example of a sourcing solution is SAP Ariba’s Sourcing tool.

3. Have a Solid Sourcing Strategy

Your sourcing strategy is used to find the most effective, efficient, and reasonably priced solution to your supply chain needs.

So, how do you identify the right product or supplier?

Here are some tips:

  • Understand the market trends. 
  • Always pick quality and time over price. 
  • Build relationships with several vendors in the market. 
  • Have clear expectations or targets. 

4. Have Multiple Vendors for Each Product Supplied

Building long-term relationships with your vendors or suppliers is extremely beneficial to the supply chain. However, if the pandemic taught us anything, it’s the importance of having backup plans.

Supply chains are more flexible, visible, and resilient than ever before. Despite this, there is still an element of uncertainty surrounding supply chains.

To be better protected, it is critical to work with more than one supplier. A great place to start is the Ariba network where over you can connect with over 40 million suppliers and growing!

5. Constantly Review Suppliers

A supplier review provides insight into the supplier’s performance.

Constantly reviewing a supplier ensures that potential disruptors are identified as soon as possible; giving you the opportunity to prevent them from causing harm to the supply chain.

To get the most out of your supplier’s performance, make a list of performance indicators. Quality, service, delivery rate, damages, compliance, innovative ideas, and cost are some examples.

Summary

Disruptions in the supply chain are undesirable. It’s not just that they cost the company time and resources, though those are significant. The unfavorability stems from the impact on the company’s customers.

What are some common disruptions in your supply chain?

One of your primary responsibilities as a supply chain or sourcing manager is to prevent disruptions. Particularly artificial disruptions. One of the most effective approaches is to develop an effective sourcing strategy.

For your procurement solutions and services, click here at www.premikati.com

Oct 05

Contract Management Software Boosts Quick Wins for Procurement Teams

By Procurement No Comments

Contracts are the heart and soul of procurement operations. Even a few outdated processes can slow down your team and impact supplier relationships. A modern contract management system, however, can eliminate many long-standing painpoints, save time, and even enhance communications with suppliers in ways that may lead to greater trust and better deals. The following are just a few reasons that robust contract management is a big win for your procurement team:

Easily Search Using Keywords

Do you know where all your contracts are? Do you know which suppliers provide which items without having to go on a wild goose chase? A good contract management system helps centralize your contracts in an indexed database so you can easily search for whatever contract information you need, even on the go.

Blaze Through Contract Processes With Templates

Most procurement teams send a lot of very similar contracts that go on to follow very similar processes. Instead of starting over from scratch every time or using makeshift methods (like the “find” function) can result in errors. Contract management based on SAP Ariba enables the use of templates to manage contract cycles that behave alike. By using templates, your team can ensure that all changes relevant to the supplier at hand have been made accurately and consistently across the board, more effectively and efficiently than other, outdated methods. Even if entire contract templates don’t sound suited to your business, SAP Ariba can handle a full clause library so your team can pick and choose as needed.

Templates help ensure agreement terms are in line with your company’s legal advice from the start, speeding up contract creation and completion to unprecedented speeds. This doesn’t mean you’re locked in, though. SAP Ariba-based contract management also allows for non-standard agreements which require closer review. 

Information Dashboards and Notifications

When one of these nonstandard agreements comes through, all relevant parties can receive a notification to review the requested changes. This helps eliminate minor changes that can turn into big risks that might otherwise go unnoticed without a templated system. This helps ensure a healthy start for buyer and supplier alike. 

Other information dashboards can present important info in a quick, digestible, easy-to-under format. Find data on all of your contracts like contract duration, bids, and upcoming important dates.

Alerts for impending contract renewal dates can offer teams enough time to re-evaluate each supplier and research alternatives before the renewal date instead of being blindsided when the renewal date has come and passed. This way, your team can enter negotiations well prepared as well as save everyone time in the process. 

Manage Compliance And Performance

Including managing compliance for nonstandard contracts and mitigating many of the associated risks, a good contract management system can manage both internal and external compliance concerns. Whether compliance from a regulatory body or an internal expectation of performance and quality, SAP Ariba can ensure that the entire procurement process is visible and everyone involved is compliant to all relevant standards so any issues can be dealt with early, not once they’ve already caused a problem.

Esignatures For Better Speed and Accuracy

Pens are a thing of the past for procurement contracts. Esignatures bring a lot of benefits to the table for procurement teams. Not only is it much, much faster for everyone to sign online than to fax or snail-mail back and forth, it’s also safer (in Covid-19 terms and compliance terms!). Esignature software like DocuSign which is the platform of choice for SAP Ariba users walk suppliers through every box that requires a signature or initial to ensure that nothing is missed in the signing process. Esigning software can also send automated reminders to clients to ask them to please sign the contract, saving your procurement team a lot of time, leg-work, and chasing. 

Nurture Supplier Relationships

All of the things combined help you nurture relationships with your clients. Your team will have more time and more energy to truly engage with suppliers to establish trust and rapport—two qualities of a great buyer-supplier relationship that can easily net your team better deals and priority communications. 

See Your Best-Value Suppliers At A Glance 

A proper contract management system is also able to pull all of the above together to show you which of your suppliers are the best value based on the data you have provided. Based on data, good procurement software can let you know which suppliers to focus on in order to make the greatest impact. That may mean deepening partnership opportunities with some suppliers but it may also call attention to low performers so changes can be made as soon as possible. 

If you want to see what we can do for you with our SAP Ariba-backed contract management system, reach out to us today. 

About Premikati

Premikati is a woman-owned business of procurement experts providing best-in-class software to maximize your company’s ROI.  

Our award-winning team has a 100% success rate implementing on-time and on-budget, due to our agility, leanness, operational experience, and the ability to tailor the transformation process from C-level to end user. (For more information, visit www.premikati.com)

Sep 04
Premikati Contract Management

Contract Management for CFOs

By Procurement Managed Services No Comments

7 Ways Financial Departments Benefit From A Modern Contract Management System

 

Finance and procurement go together like peanut butter and jelly. Procurement teams must have both time and funds to complete their tasks while financial departments must control spend and guide money towards the highest-impact activities available. Contract management software like SAP Ariba help finance and procurement work together smoothly while saving everyone a ton of time and money. Here are seven ways a good contract management system can benefit your financial department: 

Lower Total Cost of Ownership (TOC)

If there’s one thing that excites a finance pro as much as increasing a company’s revenue, it’s saving a boatload of money. Using a contract management system is a high-impact path to lower TOC vs. a traditional pen, paper, and fax machine system. Between reduced liability costs, on-time contract renewals, salaries that go further thanks to a major speedboost, and data-based insights into suppliers, a proper contract management system can go a long way to reduce costs. As compared to the analog method and other digital contract management systems on the market, SAP Ariba offers more bang for the buck at a lower price point for any small to medium enterprise looking for a robust contract management system. 

Mitigate The Risk Of Costly Liability Issues

Many risks are preventable with the right tools. Contract management systems help mitigate risks, effectively saving money, in a variety of ways. First, they reduce contract errors such as unsigned fields or accepting a modified, nonstandard contract without review. Because compliance and performance information is stored within the CMS, it’s also easier to see which suppliers may pose problems for the business in the future by offering shoddy quality products or failing to maintain compliance with governmental agencies. 

Stopping these problems from the onset can save massive amounts of money in legal fees as well as reductions due to loss of reputation. 

Broadstroke Benefits With E-signatures

E-signatures let suppliers sign their contracts online. This process can save a lot of money compared to mailing back and forth paper materials which can be bulky and expensive, especially in the face of rising mail costs. The e-signature, however, is traceable and secure. Platforms that offer this service such as DocuSign—the software of choice for SAP Ariba contracts—come with other perks too. They walk signers through each step of the signing process, highlighting the field to sign or initial to make sure no spaces are left blank. This reduces fees that could be associated with any legal recourse that arises from an unsigned or improperly-signed contract. 

Save Time And Reduce Salary Costs

Perhaps more beneficial, e-signature software reminds signers to complete the task which not only ensures compliance, it saves a ton of money in time procurement doesn’t have to spend to reach out and pester people for signature. The cost associated with procurement and legal professionals can quickly balloon if employees get bogged down in sluggish outdated processes. By providing contract templates and a clause library as well as esignature functionality and dashboards with the most important information, each employee can focus more on high-impact tasks instead of menial, wrote jobs. 

Never Miss A Key Date

Especially when underperformance has been an issue, missing a key date to cancel or renew a contract with a supplier can be devastating financially. While it can be incredibly tedious to try to manage all major contract renewal dates using analog methods, a good contract management system can keep everyone on track for success. SAP Ariba offers users a dashboard with upcoming important dates such as contract renewals so there is ample time for research and negotiation that could save a lot of money.

Gain Full Visibility Of The Entire Contract Lifecycle

Optimization is hard when you can’t see everything at play. Contract management software offers financial departments full visibility into the contract management lifecycle making it easier to analyze, strategize, and optimize for the best possible cash flow scenario. With SAP Ariba, the entire set of actions from initiation to renewal are kept in a central database with a variety of other supplier information within a fully-auditable trail. 

Analyze Your Best-Value Suppliers 

With more information about each individual supplier, finance professionals gain insight into  how each supplier plays a role in the organization. Which suppliers bring the most value to the table based on a variety of factors? Where is there room for negotiation? Which suppliers should be replaced as soon as possible. By understanding where value lies within your contracts and suppliers, it’s easier to make wise choices without all the guesswork of papers and pens. 

About Premikati

Premikati is a woman-owned business of procurement experts providing best-in-class software to maximize your company’s ROI.  

Our award-winning team has a 100% success rate implementing on-time and on-budget, due to our agility, leanness, operational experience, and the ability to tailor the transformation process from C-level to end user. (For more information, visit www.premikati.com)

May 13
Organized Contract Management

5 Reasons You Need a Real Contract Management System

By Procurement No Comments

Are you still using Sharepoint or similar software for contract management? You may be putting your business at risk and losing a lot of time and credibility in the process. A real contract management system not only boosts efficiency and reduces liability, it makes everything so much easier. It’s like sending your contracts on a vacation with a day-spa—the whole supply chain process is going to be a lot more zen. 

If I give you fifty random contracts to find… how fast can you find them?

If you’re not using a robust contract management system, the answer to that question could be days, weeks, or worse—maybe you couldn’t find all of them. If that last part applies to your business, you’re not alone.

When we have had clients come to us for help with contract management, we’ve asked them this exact question. One client (we’re not naming names! There’s no shame in fixing a broken system.), they could only find sixteen out of fifty contracts over the course of three full days searching.  Yikes. Talk about a costly timesink, especially when you think of this inefficient process accumulating over years of business. 

“When am I honestly going to need to find fifty random contracts?” some ask. Let’s talk about when and why this matters to your business. 

  • You need to cancel a contract. You are not sure about the start or end dates.
  • You have suppliers for duplicate or similar products.
  • Your company gets involved in litigation regarding a supplier, perhaps due to faulty products that caused harm to your customers.  
  • Your line of business is in the healthcare industry. Not being able to pass this test effectively could jeopardize your business’s accreditation.

With proper contract management, this task should be as easy as searching Google. A few quick taps of the keyboard, and there are your contracts. Easy peasy, and so much less stress when a situation is already wearing on your nerves, such as in the case of a lawsuit. It’s one less thing for you to worry about, and can save massive amounts of time, money, and Tylenol over years of running a business. 

Are all of them signed by both parties? 

A contract that isn’t signed by both parties is no contract at all—it’s as enforceable as a scribbled-on burrito wrapper. Especially when you’re dealing with lots of different contractors who renew at different times of the year, it can be difficult to track who has signed what and sent it back without a good system supporting you. 

Carrying contracts that aren’t signed by both parties is a huge risk to your business.  We’re talking sub-par harmful products with no recourse, errors and ommissions insurance nightmares, unfortunate liabilities in the case of catastrophe. It can be legal chaos to find out, in a desperate moment for your business, that a contract was never signed, thus there’s nothing you can do. There was never an agreement at all, for most purposes. 

A successful contract management system will ensure everyone you do business with has signed all necessary documents, so you’re never caught with your pants down. This brings us to our next point…

Do you use electronic signatures?

A startling number of businesses are still managing contracts like they were dropped in a cubicle in the early 90s. Faxing? It needs to be a thing of the past. And let’s toss out pen signatures too while we’re at it.

Let’s be honest, do you think your business would basically implode if we dropped your fax out the window? 

Well, let’s have a lesson in gravity, because putting so much stock in an outdated, inefficient method of transmission is costing your business a lot of time and money as well as putting your business at risk. 

Electronic signatures through applications like DocuSign are a reliable method of signing contracts in a way that boosts efficiency for you and your contractor while also resolving the issue of carrying contracts signed by only one party. 

With e-signatures, contractors are shown step by step which places require signatures and initials throughout a contract, so there are no more missed steps. Aside from the fact that it is straightforward, nearly instant, and auditable, they also help in another way—reminders. Have you been waiting for two weeks on a signature? Let the platform automatically remind your client. It’s one less thing to pay your employees to manage and is likely to get that contract back signed faster than older methods. Plus, it’s easy to organize contracts that are already digitized. Bye, bye scanner. Enjoy the company of the fax machine. 

Do you have a report that shows when all of your contracts expire?  

Is it time to renew your contracts? Right now? Last week? If you’re like most businesses without a CMS, you have no idea. 

Knowing when your contracts expire lets you be a step ahead. Unhappy with a supplier? You’ll probably need some time to search for a new one before you drop the old one. That means research, comparisons, time, and ultimately money. It’s not something you want to have to rush through. 

A real contract management system will let you know which contracts expire 30 / 60 / 90 days in advance, so you have plenty of time to determine your most advantageous next move. 

Can you quickly and easily keyword search?

Do you need to know which contractors you have supplying bed linens? Toilet paper? Are you among the buyers in the Great Glitter Conspiracy*? With a proper contract management system, you just need to do a simple text search to find exactly what you’re looking for.

Don’t settle for anything less than user-friendly, data-driven contract management that keeps you ahead of the curve instead of rustling papers and unjamming the fac machine way, way behind it. 

About Premikati

Premikati is a woman-owned business of procurement experts providing best-in-class software to maximize your company’s ROI.  

Our award-winning team has a 100% success rate implementing on-time and on-budget, due to our agility, leanness, operational experience, and the ability to tailor the transformation process from C-level to end user. (For more information, visit www.premikati.com)

 

*Spoiler alert: After much deliberating and searching among hordes of Redditors, the answer has been found.  It’s the boating industry. Boat paint uses glitter. However, the intense secrecy surrounding glitter production and the surprising technological complexity of glitter creation makes it worth a look for the curious at heart. 

 

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