Contract Management and Operational Excellence
Operational excellence can’t be achieved without reliable, efficient, continuously improving business systems.
“Operationally excellent enterprises possess the processes and structures — or the ‘intangible assets’ — that give them the visibility, control, tools, and management practices necessary to drive greater operational effectiveness and efficiency,” sums up Faisal Hoque, the founder and CEO of BTM Corporation, in his insightful Fast Company article, “The Anatomy of Operational Excellence.”
Systems not only need to be functionally excellent, they need to be structured for continuous improvement, Hoque says.
“Delivering continuous improvement in the marketplace among competitors and customers requires enterprises to identify, understand and create the capabilities, behaviors and focuses necessary for repeatable, continuous and measurable operational improvement,” he says.
No aspect of operations calls out for systematic management more than the contracting process. Enterprises that manage contracts without contract management software to automate the process are almost certainly losing money due to the inefficiencies, mistakes, and oversights that naturally occur with manual contract management.
The most-basic benefit of contract management software is that it includes tools that facilitate efficient contract management. Automatic reminders alert the appropriate people when actions need to be taken on milestone dates, such as renewals, expirations, and payments due. Pre-approved contract templates and clauses make contract authoring faster and far less risky. Contract routing assures that the right people see contracts for revisions or approval at the right time. And contract management software ensures that all stakeholders are working from the latest versions and can easily see changes.
Operational tools such as these help reduce costly human error, prompt revenue-generating (e.g. collecting all allowable penalties) and cost-saving actions, improve vendor and supplier relationships (due to increased reliability), and allow contract management to be conducted with less labor cost.
Contract management software allows the centralization of all contracting. Disparate, uncoordinated contracting activities within an enterprise can be united to achieve advantages such as bulk purchasing discounts, improved supply chain management, and greater strategic communication and cooperation between sales, marketing, accounting purchasing, inventory management, executive management, and all other stakeholder departments.
Contract management software simply makes the contract workflow clearer, smoother, and faster.
Even with enterprise contract management software, there is always room for improvement of the contracting process. But the software is a great aid in the continuous improvement effort that Hoque accurately deems as essential to operational excellence. The data aggregation, analysis, and reporting features of contract management software will point the way toward process improvements, such as improved vendor/supplier selection, more-astute negotiation strategies, and opportunities to reduce approval times.
By constantly measuring contract performance, enterprises can identify and take the steps necessary to strengthen that performance.
Enterprise contract management software leads to consistency and efficiency in the contracting process that can enable enterprises to increase revenue and decrease costs. Compared to manual, paper-based processes, contract management software provides a substantial competitive advantage, and it’s essential to the achieving the goal of operational excellence throughout the organization.
In addition, contract management software’s measurement capabilities support the focus on continuous improvement that is indispensable to sustained operational excellence.
With quality contract management software readily available as SaaS, it’s easier than ever to take advantage of the many benefits it offers, without any upfront capital investment. Other enterprises prefer in-house solutions, but either way, contract management automation is a step that enterprises can’t afford not to take if they want to remain as operationally adept as possible.