With a strong desire to grow and expand, companies are dealing with an increased volume of contracts with multiple third-party vendors for sourcing products in different countries. This increase in contract volumes, without a suitable digital strategy and a technology solution, sows the seeds for a problem that only becomes apparent when it becomes too large to handle. If there has been a minor inconvenience in handling these contracts, it may end up becoming a serious crisis.
Sometimes it just takes a crisis for executives to appreciate the risks of operating without a robust contract lifecycle management (CLM) system. With missed contract deadlines, compliance failures, inefficient approval workflows, and ineffective reporting can result in severe consequences. Poor CLM can also cause a subtle, steady erosion of profitability.
Why Contract Management Matters to Retail Business?
Today’s retailers are competing in a highly fluid market with tight margins. To win the rat race companies must have full visibility into their vendor relationships and sales performance to reduce leakage and optimize operations. Contracts are key to meeting these challenges.
If left unaddressed, these challenges have the potential to lead to ineffective sales programs, promotional budget leakage, and delayed responses to competitive pressures.
In the retail industry, paperwork is done daily for a large number of cashier operations. This traditional paper process leads to significant costs (consumables, printing, and sometimes sending) and generates some delays. There is a need for efficient centralization of contract documents by printing, signing, scanning, and storing them.
As a retail organization, you understand there is always contractual risk in working with third-party vendors but is your organization really prepared to meet that risk head-on with a contract management strategy across your vendor ecosystem?
While speaking to companies about their current contract management processes and the challenges Below are the top three common contract management issues in the retail industry Aavenir sees that are available to address them.
1. Limited Contract Visibility
A lack of contract visibility continues to be a top contract management challenge for large retail companies. Contracts may be stored in Outlook inboxes, local shared folders, or even filing cabinets. When issues arise requiring contract review, they can be difficult or impossible to find.
Customers and vendors are also requiring more information about every step of the supply chain, from production to purchase, information that can only be found in contracts.
2. Slow Contract Turnaround Time
Any number of issues can slow contract turnaround time. Perhaps a user can’t locate the proper template, or maybe redlines sent back from a supplier get lost in an email thread. Or there could be an approval bottleneck in the legal department.
The fact is that without a robust contract management solution, a company may have no idea why its contracts take so long to get approved, as there is no systematic way to monitor how long a contract sits at each stage and identify delays.
3. Lack of Contract Standardization
A common contract management challenge for retail enterprises with ad-hoc contract authoring processes is a proliferation of contract clauses and templates in circulation. When contracts become non-standardized, it falls on the legal department to read each contract line by line to make sure the documents don’t expose the company to risk.
How leading retail companies are managing contracts?
Think to yourself – how do you manage the numerous contracts that your company has entered into over the years? Are these centrally managed? Who is monitoring the performance standards with your service providers? What is the cost to your business if a contract is lost or forgotten?
With an effective contract management program, you will be empowered to understand the answers to these questions and more. This means less risk, improved efficiency, and better profits.
A platform for retail organizations to effectively manage contracts and the processes they power.
- Centralization: Consolidate all contracts including 3-rd party paper contracts under a single, global, centralized repository on Now Platform to better manage contracts.
- Flexible Workflow: Quickly upload 3rd party contracts and drive them through the entire process of review, approvals, signatures, and managing renewals/terminations on a unified platform, thereby reducing contract turnaround time.
- Powerful Reporting & Dashboards: Monitor in real-time – all contracts with pending approvals, pending signatures, upcoming renewals/terminations, expired contracts, etc., and take immediate actions.
- AI-Powered Clause Management: Gain real-time acquisition guidance with intelligent comparison of previously executed clauses to quickly identify acceptable redlines and nonstandard deviations and enable mass operations to create, update, and terminate transactions using bulk utilities.