The procurement profession has evolved over the last few decades from a clerical, transactional role into a strategic business function. With this transition has come change and a shift in priorities for those at the heart of every business’ procurement department. Less concerned now merely with cost-saving and logistics, the increasing cross-functionality of the procurement department means that there is one word keeping procurement leaders awake at night more than any other: Risk.
Today’s global marketplace means that challenges facing procurement teams are becoming ever more complex, whether it’s navigating the impact of foreign regulatory policies, like GDPR or strict anti-corruption due diligence requirements in vetting third-party contracts. It is a fact that procurement faces a diverse range of threats that could have a massive impact on the wider business. This has turned efficient contract management tools into a necessity rather than a luxury.
What are the biggest challenges facing procurement teams?
Consider the potential consequences for your business if an important supplier went into liquidation, or was affected by natural disaster. What if there was a change in health and safety legislation that prohibited the use of a major component, or a manufacturer was affected by civil unrest or conflict?
And what about more direct risks to your business?
In the UK, the National Cyber Security Centre released their 2017-2018 report into cyber threats to UK business. The report claimed that the biggest threat to organizations from cyber attacks is through their supply chain. No matter how robust an organization’s cybersecurity, they remain vulnerable to attack via third-party stakeholders.
The report warns, “It is clear that even if an organization has excellent cybersecurity, there can be no guarantee that the same standards are applied by contractors and third party suppliers in the supply chain. Attackers will target the most vulnerable part of a supply chain to reach their intended victim.”
“Criminals are highly likely to continue to exploit long-standing and well-known vulnerabilities in victim infrastructure,” the report continues.
In order to prevent cyber attacks via their supply chain, the report recommends that businesses follow the principle of ‘least privilege’, providing external parties with the bare minimum access to data required to avoid operational difficulties.
Even on a more domestic level, there are often so many stakeholders touching supplier contracts that the variables and potential for human error can be extremely complex and difficult to manage.
Spend Matters recently updated their Supply Risk Management and Compliance Landscape Definition and Overview and identified the key areas of risk affected procurement teams currently include, though are not limited to:
- Supplier financial viability
- Supplier performance
- Disruption-related risk including natural disasters and weather
- Political, country and trade risk
- Brand reputation risk
- The ever-changing domestic and foreign regulatory landscape
- Total cost risk factors
- IP risk and material traceability risk
- Legal risk
- Global financial uncertainty
- Rapid technological advancement
Long gone are the days when the procurement department need only expect a pat on the back for negotiating lower sourcing costs – the stakes are far higher.
What is the best way to mitigate these risks?
Your procurement function needs to master as much control as possible over your contract process at all stages, from negotiating terms, to drawing up agreements, managing documents and data, creating an exit strategy and managing third-party compliance issues. A robust, secure supplier contract management tools can help overcome all these challenges and more, giving your business the insight and protection needed to navigate the diverse and widespread risks facing the business landscape today.
Supplier contract management tools can help consolidate supplier contracts, digitalize and streamline processes, and provide structure to processes to protect from inefficiencies and human error. It also helps manage supplier performance, and can ensure compliance.
How ProcurePort’s Contract Management Tools Can Help
ProcurePort’s Contract Management Software and e-Tender Management tool provides a secure cloud-based solution for contract creation, management, execution, completion and analysis. The application manages the entire process from contract negotiation to expiration and exit strategy. Contract management software also provides valuable insight into supplier performance and compliance issues.
Our contract management tools also create an opportunity to consolidate your vendor management into a single electronic repository for all documentation, eliminating the inefficiencies and risks associated with standard paper-based contract management processes. On top of this, it gives you on-demand access to contracts through an easy to use web-based application, plus robust functionality, reporting features and alerts.
To find out more about how our Contract Management Software may help your procurement department mitigate the risks to your business caused by lax supplier management systems, contact our expert team to discuss your needs.