Identifying Contract Management Process Improvement in the Organization

“Process improvement” means to make things better. The best way to improve the contract management process is to identify the root cause of an issue and think of ways to correct it. This may not be an easy fix. Most of the time, contract management process improvement involves analysis of why events occur with a certain result. This requires an examination of all the factors impacting the process: the resources used in the process, the methods and tools used, the roles and responsibilities of those on the contract team, and the people performing the work.

This examination produces key learnings as to what causes things to happen in a process. Once the negative or undesirable activities are identified, this knowledge can be used to reduce variation or inconsistency, eliminate and remove redundant activities that offer no additional value to the process, and then realize a greater return and improved efficiency.

“Process improvement” encompasses both a global and microscopic view of seeing how a team can do its work better, which means increased productivity and reduction of most of these expenses.

Why is it essential to have efficient contract management for organizations’ process improvement?

Contract Management Software can play an integral part in the process improvement for the entire contract management function in your organization. By implementing best practices solutions, your organization will leverage an effective tool to automate manual processes that are part of the contract lifecycle, as well as product reports for further contract management process improvement analysis.

The ConvergePoint Contract Management Software has unique and dynamic tools that will ensure your organization’s contracts are being approved through the appropriate levels of management, executed on time, contain all necessary information for auditing, and notify you of renewals to save recurring costs.

Also read: Where’s the Weakest Link in Your Contract Management Process Chain?

Two comprehensive and turn-key SharePoint sites streamline your complete contract management lifecycle. This easy-to-use solution lets you request, create, approve, manage, and renew contracts on a single contract management site with extensive search and reporting functionality. Our Contract Request Management allows your organization to:

• Implement the solution quickly with seamless migration and customizable plug-and-play features;
• Create custom workflows and automatically assign contract types;
• Coordinate the approval process with a multi-tiered approval process;
• Access real-time status updates throughout the contract process;
• Set task priorities by parameters such as contract dollar amount; and
• Scale our solution to your needs and grow it along with your organization.

In addition to these valuable components of ConvergePoint Contract Management Software—most critically—it allows you to manage all aspects of the contract creation and negotiation process on a single system.

What are the key metrics used to measure contract process improvements?

It is important to evaluate specific performance metrics regularly to drive significant improvements in your organization's contract management process. By tracking and monitoring those metrics, organizations can identify opportunities to improve their contract management process.

Here are some important metrics to consider:

• Contract Cycle Time
• Contract Compliance Rate
• Contract Renewal Rate
• Contract Error Frequency

Contract Cycle Time

Measure the total time it takes from the initial phase of the contract to its execution. Extended cycle time may be a sign of bottlenecks like approval delays, or negotiation issues. Shortening the contract cycle improves business relationships and increases productivity.

Contract Compliance Rate

By ensuring that both parties follow the agreed terms, monitoring contract compliance reduces the risk of legal disputes and regulatory fines. Low compliance rates may indicate inadequate training, poor oversight, or unclear contract language.

Also read: Harnessing Contract Management Lifecycle Software with SharePoint for Legal Department Efficiency

Contract Renewal Rate

A high renewal rate defines customer satisfaction and trust in your services. If renewal rates are low, it may be a sign of missed opportunities for maintaining long-term relationships, or improvements may be needed in communication or negotiation.

Contract Error Frequency

Errors in contracts such as missing information or inconsistent clauses, may result in non-compliance. Reducing the frequency of errors can streamline the contract process, minimize risk, and improve the overall contract quality.

Organizations can take a better approach to contract management, to evolve and meet the growing demands of the business by closely tracking these KPIs.

Also read: Are Your Contract Management Processes Outdated?

How to Improve the Contract Management Process in your Organization?

Improving your contract management process involves a combination of strategic planning, technology integration, and ongoing evaluation. Here are some steps to improve the contract management processes in your organization:

Centralized Storage:

Implement a contract management system that has a centralized contract repository for all contracts to ensure easy retrieval and quick tracking. This will reduce the time spent searching for contract agreements and improve your productivity.

Automate Approval Workflows

Use contract management software to automate approval workflows, to ensure that contracts move through the right departments without manual support to minimize delays.

Standardized Contract Templates

Use standardized templates for frequently used contract types to reduce drafting time, maintain consistency, and limit the risk of errors.

Roles and Responsibilities

Assign clear roles and responsibilities for each step in the contract lifecycle from drafting and negotiation to approval and execution, to avoid bottlenecks and accountability issues.

Monitor Contract Milestones

Monitor important contract milestones such as renewal dates, deliverables, and compliance deadlines. Automated alerts can ensure no deadlines are missed, reducing the risk of non-compliance or missed opportunities.

Using Clause Library

Create a clause library containing pre-approved, and standardized clauses. This allows legal and procurement teams to draft contracts while ensuring consistency across all agreements.

Improve Contract Negotiation

Use a platform that enables real-time communication between all parties involved in the contract negotiation process, facilitating faster resolutions and avoiding misunderstandings.

Also read: Advanced AI-Enabled Contract Negotiations with AddIn AI redlining

Monitor Contract Performance

Regularly evaluate contract performance by measuring key metrics like delivery schedules, and compliance with obligations. This will help identify areas for improvement and strengthen contract management.

Conduct Audits

Perform routine audits of your contract management system to ensure contracts are compliant with regulatory requirements, up to date, and aligned with business objectives.

Leverage Analytics for Continuous Improvement

Use contract management software analytics to identify trends, and contract risks, and make data-driven decisions for future contract strategies.

Conclusion:

“Process improvement” is more than an event; it’s a mindset. The leaders in your organization must constantly check reports on critical processes like contract management to maintain an environment that only progresses. Providing quality tools and techniques that aid in this pursuit as a regular and ongoing part of the process allows you to automate busy work like searching for documents, and generating reports to locate your bottlenecks.

An emphasis on contract management process improvement shows your employees, clients, and prospects that your organization’s leadership is forward-thinking and proactive with its expectations of how your organization works with others.

Ready to streamline your contract management processes and identify key areas for improvement? Request a demo today to see how ConvergePoint’s Contract Management Software can drive process improvement in your organization.