Having a busy procurement department means your company is growing. Though it should be a good sign for most any business, a jump in activity can open the door to potential supply chain risks. The development of legal contract management seems more stressed than ever.
Just a decade ago the main concern for supply chain risk was logistical: supplier failure. As we look ahead to 2020, Forbes reports that concerns about data security are severely overshadowing the logistical issues of the past.
Legally Sound Procurement
As the business world goes digital, the procurement industry has changed. With globalization comes regulation, and with heightened regulation comes legal risk. Compliance, especially in regard to sensitive client and vendor data management, is crucial. The good news is that business software solutions are addressing these emerging problems as they appear.
We’ve discussed how to shop for contract management solutions in general, but let’s take a look at how a digital solution actually helps you achieve legally sound procurement.
Without a Legal Contract Management System
For most companies, the reality of procurement looks like a wide supplier base and hundreds (if not thousands) of supplier contracts to manage. The volume of contracts and human error leads to contract deadlines passing by without notice. That leaves your company exposed to rolling agreements without protections and missed milestones. Your ability to remain on the same page with vendors about prices and expectations is open to human error. Without a contract management system, these lapsed agreements have to potential for value leakage for both you and your business partners.
Beyond contract lapses, working without a contract management system is dangerous on a data security level. Every company is housing sensitive supplier data that presents a risk for cyber-attack. Information such as supplier financial viability and past performance data is valuable financial data in the eyes of hackers. By employing a contract management system with a secure repository, you can maintain a secure contract management environment digitally and keeping your brand safe from data breach.
The Benefits of a Contract Management System
A contract management system does a lot merely by digitizing everything. It means your supplier contracts are equipped with notifications so that you don’t lapse on contracts anymore. At-a-glance calendars and transparent workflows mean that your whole procurement department is on the same page. Digitization also means supplier contracts and background data gathered on your business partners remains securely within your company’s digital repository, subject to authentication and full permissions controls. Digitization ensures that your data storage is legally sound.
Beyond just a safe storage place, digital contract management gives you the ability to manage procurement processes in a way that was impossible with paper. Contract management software actually tracks your recordkeeping, takes note of who has accessed which documents and when, and is designed to disallow unsound procurement activity.
This software handles a large chunk of your ethical and legal issues by automating compliance with contract terms. Essentially, if an employee shouldn’t be doing something (such as downloading sensitive data from the system) they simply won’t be able to. If and when they make an attempt, the system will give them an error message and simultaneously alert a supervisor who can address the issue. This gives your procurement team the chance to make clarifications about internal policies to that employee. These built-in permissions and digitized compliance monitoring features can be updated quickly, making it easy to adapt as legislation in your industry evolves.
There is an added bonus: When your contract management system handles the bulk of your compliance issues, it cuts down on calls to your legal team, saving your firm money in legal expenses as well.
The bottom line is that contract management software gives you peace of mind. From safe storage to procedural reinforcement to discreet alerts, this kind of digital system makes compliance easy. It saves your company from litigation, fines, and supplier-related risk. It keeps you safe and allows you to carry out legally sound procurement in the most efficient and modern way possible.
To find out if you are ready to digitize your contract management, request a demo of ProcurePort’s cloud-hosted e-procurement solution today.