When it comes to business operations, it makes sense that many aspects of running a business turn out to be cyclical. Kind of like Elton John teaches us with “The Circle of Life” in The Lion King, as a process comes to a close, no matter how long or large that process may be, it often recycles and starts back over at the beginning. We can see this with several business activities, perhaps this is most clearly seen, though, in the process of contract lifecycle management. 

Contract management is one of the foundational building blocks in any procurement strategy, and it starts before a contract is ever even awarded to a supplier or vendor. The very beginning of a contract starts with identifying a need within the organization, from there, the contract is written, and your procurement professionals can conduct a reverse auction to find a suitable vendor. 

The reverse auction begins with a request for proposals, normally delivered to an already pre-vetted grouping of vendors and suppliers that meet certain stipulations for the contract. Upon commencing the reverse auction, or other procurement auction-style, those vendors can compete within and amongst one another to win the contract. These contracts are normally fairly large, which is why the most common type of procurement auction is a reverse auction, as it allows the organization awarding the contract to reap the most savings possible on what is typically a hefty contract. It’s also important to know how to define contract management vs contract administration in which the former is the actual management, analysis, and decision making based on existing contracts, and the latter concerns the organization and administrative activities associated with contracts. 

Technology and Contract Lifecycle Management

While traditionally contract management and the entirety of the contract lifecycle were managed manually. While this is certainly impressive, manual contract management is simply unviable in today’s competitive and hyper-speed industries. Hence the creation of contract management software. Contract management software provides your procurement team with the tools and tactics they need to successfully manage the entire contract lifecycle from start to finish. 

Powerful contract management software goes above and beyond simple analysis, incorporating artificial intelligence, automation, and other sophisticated software to provide your team with the powerful information and analysis they require to make strategic decisions that benefit the business. 

Data-Driven Decision Making

The analysis that sophisticated contract lifecycle management software provides allows your staff to make better, data-driven decisions that will ultimately elevate the entire company. Using automation and artificial intelligence, your contract management software will provide your team with detailed data analysis in a fraction of the time it would take to do it manually. This improves organizational efficiency, saves employee time, and ultimately leads to huge savings. 

By incorporating a contract management technology, your team will be provided with stronger insights into repetitive, redundant, and duplicate contracts that can be eliminated, as well as provide insight into which contracts are valuable, and where your greatest savings are. 

This information then can be used to make strong, data-based decisions on which contracts need to be renewed, which contracts should strictly be deleted, and which supplier relationships are offering your firm the most value. Then, as spoken about above, the entire contract management lifecycle starts over, as a new contract is generated, whether it be replacing a canceled contract, or is a brand new need that’s been identified.

Pairing contract lifecycle management software with other procurement technologies is also a very common strategy in building a comprehensive system of processes and procedures within your procurement department. Utilizing contract lifecycle management software in concert with other procurement technology bolsters the entire procurement department, yields more efficient operations, and leads to much greater savings. 

The Benefits of Contract Lifecycle Management

There are plenty of benefits when it comes to implementing contract lifecycle management as a regular practice in your organization. First and foremost is the greater insight that contract lifecycle management provides into all of your contracts individually, utilizing artificial intelligence to do so. Furthermore, organizations that implement contract lifecycle management also see higher rates of efficiency and productivity, and a contract library and pipeline that are simply higher quality than organizations without this advantage. 

A Brief Summary and Overview

Contract lifecycle management is the cyclical process in which an organization first creates a contract, awards it to the winning vendor or supplier, and then monitors the contract throughout its entire duration. Enhancing your contract management system in 2021 will lead to a stronger annual performance, higher levels of internal efficiency, and more streamlined business operations in general. 

For more information on contract lifecycle management or anything else related to procurement, keep browsing ProcurePort. ProcurePort is the internet’s premier place for everything procurement, from knowledge and information to software and technology, and everything in between. 

Become an expert in procurement with the help of our new website!

Learn More