“Management functions help increase consistency and reduce workload for internal resources by establishing standard key performance indicators for critical relationships and using technology and portals via which third parties provide performance data.”
Interesting and helpful article to help identify potential risks within business when contract and financial matters are not managed efficiently and effectively.
The article explains that a more thoughtful approach to better risk management can actually provide reduced costs, a continued focus on core capabilities and an increase in business growth and innovation, while managing risks associated with supplier relationships.
Simply by asking businesses three questions related to third-party risk exposure, the article explains they can gain meaningful insight into risk management efforts that can improve overall decision making;
All three questions posed to businesses highlight all too common issues we have encountered ourselves when providing our clients with our contract management systems.
The first question highlights how most businesses deal with their contracts data and documents. We find most companies do have some type of contract management system in place, however they are typically not suitable for the business and lack the functions and capabilities businesses need to really get their job done. Not only are companies stuck in unreliable systems and possibly error filled spreadsheets; some are using low-tech storage facilities such as filing cabinets which is ultimately making it impossible to extract important data quickly and easily. The article explains the common issue of using low-tech solutions to manage contracts data is that it is not providing notifications to renewal or expiration dates, and down that road companies are additionally increasing the duplication and loss of copies of MSAs, NDAs, SOWs, amendments and POs.
To improve the management of a contracts lifecycle and relationship and agreements made with suppliers the article suggests using technology to track compliance. Our contract management systems are marketed out to businesses that want control, compliance and savings. Over our years of delivering our contract management solution, we understand that it is important to have full control of your contracts and agreements; adopting technology makes business that much more simple as well as efficient. Technology like contract management systems will enable companies to determine business requirements and establish work practices around the management of contracts and supplier relationships.
The second question identifies the common issues around SLAs and monitoring performance. The potential solution described is to use forward-looking financial management functions to help increase consistency, and reduce workload. Our contract management systems have a supplier database and login to handle supplier data and compliance, with additional defect reporting and job order functionality for facilities departments. This type of functionality is allows our clients to perform credit reviews where they can upload relevant documents and rate risk against their suppliers, as well as handle compliance certificates and evidence contractor skills to complete work orders. Technology with more bespoke to business functionality will provide an improved working practice to ensure nothing gets missed, reduce unnecessary work hours, and ensure relationships comply with agreements; ultimately reducing risk and providing better decision making.
The final question posed to businesses addresses the issue of companies constantly on-boarding and terminating, as well as expanding or reducing third-party services, which results is large amounts of additional document management and risk management. As previously stated, adopting contract management systems that can manage a contracts life cycle and entire supplier relationship will facilitate with reduced costs, a continued focus on core capabilities, an increased growth in business and innovation, while also managing the exposure associated to third-party service relationships.
The article provides a good base start to determine if your company could benefit from improving risk management by posing these three questions. It is apparent throughout the article that the main solution is using technology to gain better control of data to in turn gain better control of risk areas in the business.
What approaches are you looking to take with your contracts and supplier data to better manage risk?
Learn more from our team and how innovative contracts management can empower your business.