Survey Shows Pharma Companies Are Losing Time and Effort to Inefficient Contract Management
Recently, Icertis teamed up with WBR Insights to survey 100 pharmaceutical leaders across the EU about how their companies are progressing on their digital transformation journeys. As we’ve found in similar surveys in the past, contracts have emerged as a major pain point in these companies' efforts to streamline operations.
In fact, the majority of respondents in this year's survey say that contract disputes either delay or disrupt sourcing deals all or most of the time. This status quo is simply unacceptable. Business is moving too fast and competition is too strong to allow contracts to cause repeated delays.
In order to diagnose why contracts are such a sticking point for sourcing, we sought to gauge where in the buying motion companies were introducing contracts to the process.
An emerging best practice in procurement is concurrent contracting: contracts managed on a digital platform are created concurrently with the RFx, bidding and awarding rounds. This approach, also known as contract-centric sourcing, allows buyers and suppliers to determine acceptable contract language at the same time they negotiate things like price, meaning that when it comes time to sign a contract, all contractual considerations have already been made.
In any sourcing deal, the contract is the ultimate product; therefore, contract-centric sourcing designs the process around ensuring the contract is considered and well-built from the start.
Yet most companies surveyed this year continue to leave contracting for last. A full 28% admitted to not even considering contract language, saying it's "legal's problem."
The fact of the matter is, if you leave contracting for last, the delays and disputes that so many companies face are all but inevitable. This leads to lots of finger-pointing between commercial and legal teams about who is to blame for the delays.
Even when contracts are ultimately executed at these companies, most of those surveyed say they are not confident their contracts adequately protect them from risk.
Contract-centric sourcing, enabled by contract management software, is a proven approach to supplier contracting that has allowed companies to accelerate business, protect against risk, and optimize business relationships.
As you read through the report, reflect on how your company treats contracts, and consider how a contract-centric sourcing approach could improve your business outcomes.