Vendor / Contract Management

Contract Management is a process of maintaining contracts with customers, vendors, partners or employees. This process involves the negotiation of the terms and conditions and ensuring its compliance. It can be summarized as the process of systematically and efficiently managing contract creation, execution, and analysis. This in turn helps or results in maximizing financial and operational performance and minimizing the risk.

Vendors play a very important role in any kind of organization. The amount of time and money spent on maintaining a vendor will help in the firm’s future success by increasing the amount of satisfied customers reduces the cost and betters the quality. Although vendor/contract management have their stories of prior failed attempts by clients they are vastly different in range and scope, they are all remarkably common in one area – they all became overly complicated.

The – start simple and stay simple approach always works best for all the organizations:

  •  Centralized view of the vendor contracts – There should always be a centralized view of the contracts with the vendors. Instead of having a file maintained manually at both the ends this works better for both the parties. It helps each of them get better access to the data as and when required according to the needs. Also the other contract details like the documents, warranties, modification history, key dates, and payment information can be accessed and updated directly by authorized users.
  • Provide and actively manage vendor insurance certificates – This provision helps in a lot of ways. As the documents are uploaded on the centralized system it can automatically evaluate the expiration date of the contracts.
  •  Keeping track of invoicing and payment details – The information about the payment details and the invoices in the central system helps the finance department rather the accounts payable and contract admin’s to know financial details of the contract and keep a check on it.
  •  Managing vendor performance assessment information – Many companies have reported having a bad experience with a vendor only to have another department or office use the same vendor again. Maintaining performance ratings and comments for each contract helps in utilizing this information in sourcing decisions to avoid the poor performing suppliers.
  • Alertness is required for the key contracts – The schedule of the various contracts and its milestones or events are registered in the central system. To add to these features there should be a provision to set up custom fields for the important contracts and their alerts like the expiry date, its renewal, warranty expiry and deadlines for exercising contact options.

All the above steps help any organization maintain a good and healthy relation with their vendor and also help in a successful vendor /contract management process thus resulting into the success of the organization.