Contract Management: Driving Better Fiscal Management and Revenue Recognition in the Food and Beverage Industry
Contract Management Best Practices in Food and Beverage Industry
About the Client
The client is a Fortune 500 food and beverage company headquartered in North America. With thousands of products being marketed all over the globe, the food and beverage industry player’ growth is expected to accelerate significantly over the next few years.
In today’s increasingly competitive business scenario, the food and beverage industry players face several challenges such as ensuring adherence to the dynamic compliance requirements for Food and Drug Administration (FDA) and the Environmental Protection Agency (EPA). These challenges have been multiplied further due to the growth of the e-commerce industry and the rise of new distribution channels. This has not only highlighted the importance of contract management in the food and beverage industry but also the need to minimize the risk of supply chain disruptions and customer dissatisfaction.
However, owing to the complex food and beverage market scenario, moving from an agreement on business terms with a supplier to a signed contract requires special skillset. The longer it takes to finalize the contract, the longer it will take your business to realize the contract’s true value. Also, since the food and beverage industry come under additional scrutiny from various authorities in every market they operate, a contract management best practices for food and beverages vertical comes in handy to help ensure organization-wide efficiency at every step, without letting the compliance policies become a bottleneck in business operations.
Leading food and beverage companies are turning to contract management platforms to reduce costs, mitigate risks, and increase profitability. Are you?
Top Contract Management Challenges in the Food and Beverage Industry
Problem Statement 1: Lack of Visibility into Scope of Contracts
The client faced several challenges in measuring and managing the huge volumes of contractual data to ensure all compliance documents such as those for FDA and Federal Food, Drug, and Cosmetic Act (FALCPA) are valid. Due to this, the client found it challenging to define and track contract costs.
Problem Statement 2: Inability to Extract Key Data from Contracts
The client’s approach to extracting insights from contracts involved- browsing through email histories and correlating data with spreadsheets to ensure they are interrelated. This was a major reason that made contract management burdensome for the client.
Problem Statement 3: Issues with Regulatory Compliance
The stringent compliance requirements in the food and beverage industry was a major challenge in contract management processes.
Problem Statement 4: Lack of Business Rules
The lack of a well-defined set of business rules and contract management repository increased the cycle-time and created errors in contract terms.
Contract management can be a time-consuming task, but if properly managed, can be one of the most lucrative areas for building business relationships and generating revenue.
Solutions Offered and Value Delivered
Contracts are core to effective supplier management and it is imperative that contract management is undertaken in a consistent and in a logical manner in the food and beverage industry. To ensure this you need to leverage contract management best practices to extract maximum insights from the information. The contract management best practices enabled the food and beverage industry client to streamline all contracting processes, reduce risks, and design a better contract management framework. The offered solutions were divided into the following phases:
The initial phase revolved around identifying the client’s needs, establishing goals, setting expectations, and defining risks to enhance adherence to contracts and service level agreements. This helped improve profits by ensuring greater efficiency in the management of the contracts and vendors.
The second phase revolved around the implementation of a contract lifecycle management platform. This empowered the client to keep track of revisions and amendments in the contract.
Through the use of contract management best practices, the food and beverage industry client witnessed an overall reduction in spend coupled with an increase in profitability.
SpendEdge ‘s contract management specialists helped the client to compress the time from agreement in principle to a signed contract, and reduce contract risk to ensure they get the best possible terms. Our specialists also supported the seamless execution of supply and master agreements by working directly with their procurement and legal teams, freeing up the need for category managers to address more spend, and drive deeper savings in the process.
Contract management doesn’t stop once the ink dries, which means performing audits on a regular basis will ensure obligations are met and value is realized. Alerts should be set for deadlines and renewals, as missed renewals mean lost opportunities to continue a relationship, and most importantly from a business perspective, lost revenue. Being aware of the importance of contract management and leveraging contract management best practices will help drive greater profits.
Why partner with SpendEdge?
With over a decades experience in the field of procurement and sourcing, SpendEdge has been a forerunner in offering contract management solutions for food and beverage industry players across the globe. We offer in-depth, powerful insights that help our clients develop effective procurement strategies to maintain a winning edge in the market. SpendEdge’s unique approach to procurement transformation encompasses robust procurement strategies and technological innovations to help businesses rapidly build the infrastructure required to fuel high-performance digital procurement enterprises.
Contract management is one of the key capabilities that food and beverage companies will have to master. SpendEdge is ready to support you in deriving the necessary strategies and actions through contract management best practices. Request a FREE Demo to know more!