Vendor management describes the processes organizations use to manage their suppliers, also known as vendors. Vendor management encompasses a variety of activities. These include selecting vendors, negotiating contracts, controlling costs, reducing risks associated with vendors, and guaranteeing quality and timely delivery.
Effective vendor contract management enables businesses to control costs, speed up onboarding processes, mitigate supply chain risks, and build stronger relationships with their suppliers. Simply put, vendor contract management, when done right, can help businesses achieve their revenue goals.
It starts with a contract
Contracts touch every part of an organization’s value chain. From demand planning to compliance; from pricing to shipping and routing; from channel management to profitability—these strategic documents define what you buy, what you sell, and how you run your business.
The right Contract Lifecycle Management technology transforms this critical business information into actionable insights and drive business outcomes.
Contracts play a central role in vendor management
Proper contract management can help you streamline your vendor partnerships, reduce risks, and protect against legal issues that may arise due to non-compliance. The right CLM technology can help companies do that in these important ways:
Contracts provide a legal framework that outlines the rights, obligations, and responsibilities of both the vendor and the organization engaging their services. They help protect the interests of both parties. The Icertis platform has a variety of powerful, configurable tools set up to help legal teams work faster, smarter and more efficiently, with the right visibility to better manage risks and ensure compliance. The platform increases the speed time to contract, including self-service contract creation wizards that can be modified by authorized users to easily adjust workflows, authoring rules, and approval workflows without the need for custom development or additional IT resources.
Contracts establish clear expectations through obligations management. Obligations management governs the goods or services to be provided, including quality standards, delivery timelines, pricing, and any specific requirements. By clearly defining these expectations, contracts reduce ambiguity, optimize performance, and protect companies from reputational, commercial, and financial risks. Good contract management software can help companies manage their commitments better and fully realize the value of their entitlements. Negotiations move faster with a robust clause library with fallback and dependent clauses, version tracking, localization support, and one-click approvals, plus support for all major mobile platforms and devices.
Contracts help to mitigate business risks in their supply chain and purchasing contracts. They may include clauses related to performance guarantees, confidentiality, intellectual property rights, liability limitations, indemnification, and termination conditions. Through proactive assessment, discovery, and continuous monitoring, the Icertis Contract Intelligence Platform helps to protect companies from the impact of operational, financial, and reputational risk. There’s more. One of the Icertis Contract Intelligence platform’s most powerful capabilities lies in its ability to help you track risk and compliance across a portfolio of contracts. Risk analysis reports, compliance and obligation tracking, plus customizable notifications and alerts, keep you ahead of any potential problems. Users can quickly pull up associated contracts or documentation, like Master Service Agreements and subsequent scopes of work, providing a holistic view of each agreement and its dependencies. And all this information is available from a simple, configurable dashboard.
Supplier Relationship Management
Contracts serve as a foundation for managing the vendor relationship effectively. They outline the terms of engagement, communication protocols, and dispute resolution mechanisms. By setting out these details in advance, contracts facilitate better collaboration, minimize risks, and promote a healthy working relationship between the organization and the vendor. The Icertis Contract Intelligence Platform extends access to outside organizations for more effective collaboration throughout the contract lifecycle. It enables secure communication with suppliers, customers, and partners more efficiently than traditional communication methods. Supplier relationship management comes built-in to the Icertis Contract Intelligence Platform. It enables businesses to handle standard supplier management challenges unique to their business cases, processes, and policies. This AI-powered application allows users to seamlessly manage end-to-end supplier onboarding, performance management, contract governance, compliances, and disengagement.
Compliance and Governance
Contracts often include provisions related to regulatory compliance, data protection, privacy, and security requirements. They help ensure that vendors adhere to applicable laws, regulations, and industry standards. The GDPR requires companies to make significant changes to data storage, management, sharing and transferring. This is an example of how regulations can have a profound impact. The consequences of being out of compliance can be severe. Yet, despite the staggering penalties for non-compliance, many organizations are not prepared. The Icertis Contract Intelligence platform helps you identify non-compliant contracts, create data protection addendums (DPAs) that ensure compliance for data processors, and track data processor obligations to ensure comprehensive GDPR compliance across the entire contract lifecycle.
Performance Monitoring and Evaluation
Contracts provide a basis for monitoring and evaluating the vendor's performance against the agreed-upon terms. Key Performance Indicators (KPIs) and Service Level Agreements (SLAs) can be defined in contracts. This makes it possible to objectively assess the vendor's performance. The right contract management software empowers businesses to analyze multiple sets of contracts and generate actionable analytics to empower businesses to make real-time decisions and actions. Indeed, if contracts touch every aspect of a business, CLM drives speed, performance, and compliance into those systems and processes, and ultimately, business performance.
Start Your CLM Journey to Better Contract Outcomes
By digitizing vendor contracts on a single, organization-wide platform, companies can gain full visibility into every contract in their organization. This empowers even the biggest operations to quickly understand and leverage all their commercial relationships—from seeing how many open contracts they have with a particular supplier, to actively mitigating risk, to identifying opportunities for better commercial performance, service bundling, and other contractual entitlements.