Procurement is a critical function in every organization. The procurement team handles sourcing goods and services, negotiating contracts, managing supplier relationships, and much more. These duties are invaluable to the success of any business because they ensure that every department has what it needs to get the job done.
However, procurement processes are often complex and time-consuming, especially when it comes to contract management. So, how can you make the lives of your procurement employees easier? This is where contract lifecycle management (CLM) makes a significant difference. Let’s explore how CLM tools help streamline procurement operations, improve contract management, and enhance overall procurement performance.
What Are CLM Tools?
CLM tools are software applications that enable organizations to manage the entire lifecycle of a contract, from request to renewal or termination. These tools typically involve a systematic approach to contract creation, negotiation, execution, and monitoring. They help automate the procurement process and processes across the entire organization by providing real-time visibility into contract performance and status, compliance, and risk management.
Why Does Procurement Need CLM?
Procurement often handles a large volume of contracts from different suppliers. Each contract has its own terms, conditions, and deadlines to monitor. Without CLM tools, procurement teams may struggle to keep track of contract status, compliance, and performance. The features of these indispensable tools help procurement teams manage supplier contracts more efficiently and build better relationships with those suppliers.
Benefits of CLM Tools for Procurement
CLM tools are invaluable resources for contract management across all departments. Let’s briefly go over some of the many benefits a good CLM tool offers to the procurement department.
Improved Supplier Contract Management
CLM tools enable procurement teams to track the performance of supplier contracts, extract and monitor key contract data, and ensure compliance with all legal and regulatory requirements by automating workflows, storing contracts safely, and providing real-time visibility into contract status.
Streamlined Procurement Processes
CLM tools help streamline procurement processes by automating various pieces of the contract lifecycle such as drafting, negotiation, and monitoring. Contract templates and clause libraries provided by CLM software make generating contracts a breeze while automated alerts ensure that the team never misses a deadline. The right CLM tool allows teams to eliminate bottlenecks, reduce manual errors, and improve overall efficiency.
Increased Procurement Value and Cost Savings
By automating procurement processes, CLM software reduces the time and resources required to manage contracts. This will result in significant cost savings, especially for organizations that manage a large volume of contracts. Automation also frees up procurement employees to spend their time on higher-value work that moves the company toward business goals.
Reduced Risk and Compliance Issues
Procurement can also use a CLM tool to lower the risk of non-compliance. CLM software allows the team to stay on top of new regulatory requirements that pertain to the company’s industry and ensures that all contracts are created and executed with those needs in mind. Plus, the visibility that a good CLM tool provides allows teams to identify and mitigate potential contract risks before they become a problem.
How to Choose the Right CLM Tool for Your Organization
When selecting a CLM tool for your organization, there are many different factors to consider if you want to find a tool that fits just right. Here are some important concepts to keep in mind throughout your search.
Before you choose your CLM tool, think about which features are essential to your contract needs. Some tools may be better at meeting your priorities than others, so you must have an idea of what your ideal software will be able to do.
Some examples of key features to look for in CLM tools include:
- Contract repository and clause library.
- Workflow automation.
- Real-time visibility via contract status.
- Reporting and analytics.
Consider which features will align best with your organization’s needs and integrate well with other existing systems.
Vendor Selection Process
Not all CLM vendors are created equal. Before choosing who to partner with, it’s important to consider a few crucial factors such as vendor reputation, customer support, pricing, and timeline of implementation. You may want to go with a vendor that has experience working with organizations in your industry and understands your unique contract needs.
Implementation and Integration
Implementing CLM tools can be a complex process that requires careful planning and execution. It helps to have a vendor who offers support and training both throughout and after the implementation process. Having a support system in place for employees as they adapt to the new system is an essential piece of change management and should help drive user adoption.
You should also take time before and during implementation to ensure that the CLM tool you have chosen integrates with other company systems. For the procurement department, that might include systems involving e-procurement and supplier management.
Contract management software is a valuable investment for organizations looking to help their internal teams streamline operations, manage contracts more efficiently, and enhance overall performance. The right CLM tool can push procurement teams to take their operations to the next level through automation, data tracking, and many other indispensable features.