What are the Key Dates In Supplier Contracts?
Too often supplier contracts are signed and then filed away in either a desk drawer or shared drive with little or no management of the contract, except when there is an issue. The supplier delivers the goods or service and the invoices are paid until eventually a new contract is negotiated or finally put out to tender.
This works fine. However, by not managing the contract properly there are missed opportunities to save both time and money, especially when it comes to missing giving a notice period or contract end date. Can any company really afford to be wasting money, especially now?
Missing a contract notice period or end date
Missing a contract’s notice period can prove costly, as a contract can automatically renew for a further year or so. There are likely to be price increases written into the original contract and worse still it could be a waste of money if the supply is no longer required, or the quantity required could be reduced. No-one wants to be tied into a supplier who is not delivering the best service for an additional year. Some types of contract can be worse than others and make it more difficult to get the notice period exactly right.
Missing a contract end date can have same similar consequences to missing a notice period and the easiest way to resolve it is to extend the contract with the incumbent supplier so that punitive rates are not charged. This is ok, so long as the incumbent supplier is doing a satisfactory job.
Misplacing contract documents results in wasting time trying to track them down or having to request them from the supplier. A supplier may not be incentivised to provide the documents and may drag their heals, wasting even more time.
Even if the contract end date is not missed, but the supply is only reviewed just before the contract end date, its quicker and easier to renew with the incumbent rather than go out to the market to get other offers. This may mean missing out on a cost reduction or working with a new supplier who offers better value for money, is more innovative or who’s values are more aligned.
How can contract management software's help?
To avoid wasting time and money, more and more companies are using a contract management system as it provides them with an easily accessible repository with all the associated documents. In addition it sends out automatic alerts well in advance of critical dates to ensure contract notice periods and end dates are never missed again.
For many companies, especially larger ones, who have more resources, it easier to create process and to monitor supplier contracts. For those smaller companies, with fewer resources there is one Contract Management solution that enables SMEs to easily stay on top of all their supplier contracts. oboloo is an intuitive self-service solution that also incorporates Sourcing, Supplier and Savings Management to enable companies to be supplier smart. To learn more please visit www.oboloo.com
Where can I find out more about supplier contract management?
- What does supplier relationship management mean?
- What is supplier relationship management?
- Supplier management process map
- What is contract management software?
- The ultimate guide to SRM