In recent times, a lot of emphasis has been placed on the procurement function as being strategically important to the business. It drives value, generates massive savings opportunity, and increases the overall operational efficiency. By using proper procurement processes including supplier relationship management and category management, organizations are able to treat the effective procurement of indirect costs, as a strategic function. With technology changing at a rapid pace and procurement practices being regularly updated, the trends within the procurement function are ever changing. So here are the top procurement trends that are all set to take off in 2018: (more…)
All business deals and projects are closed with complex contracts. The company enters into a contract with their partners, suppliers, vendors, customers, or employees. There may also be a time where multiple contracts exist with each party. With so many contracts in the table, it is necessary that a firm has deployed efficient contract management practices. Missing a small detail in the contract or overlooking a single clause in it can have devastating effects. Although the consequence of inefficient contract management can be damaging, organizations still make mistakes when it comes to contract management.
Mistakes You Make with Contract Management
#1 – Overreliance on Paper-Based System
Its already 2017, and there must be something wrong if any organization is relying primarily on papers for record keeping and carrying out transactions. In an era dominated by digital signatures, the blockchain, e-procurement, and electronic data interchange, relying on a paper-based system for contract seems outdated. Depending on the paper-based system could bring out problems such as discrepancies in two copies, risk of tampering, damage, theft, and forgery. By using contract management software, the process of drafting contract can be hastened with the availability of pre-approved templates. Additionally, contract automation can accelerate negotiation cycle, reduce erroneous payments, and cut operating and processing costs.
#2- Neglecting Document Access
Documents containing sensitive information is of critical importance to an organization. Granting full access to documents for all stakeholders may not be the wisest of ideas. It is important to limit the access to critical documents to only those who needs it. Additionally, contract management systems can grant different level of authority as required which can be restricted, read-only, or editing permissions. Also, giving write permissions to all stakeholders may bring out the classic case of “too many chefs spoil the broth” with numerous revisions. Some companies are looking at blockchain technology to implement contract management as it can ensure both privacy and transparency as required.
#3 – Failure to Engage all Related Stakeholders
Failure to engage all related stakeholders in the contract management process can be detrimental to the company. It usually happens in public sector contracts as numerous parties are affected by the contract. It might happen that once some parties are left out, it may later develop a conflict of interest, and hinder the smooth flow of operations. Modern-day contract management solutions allow the drafter to include all related parties in the drafting process. Simplified contact lists enable the drafter to double check if any concerned parties have been left out.
#4 – Storing Contract Documents on Multiple Shared Drives
Although companies are using digital packages to draft their contract, they can always make a blunder of sending out copies which will be saved on multiple drives. It not much of a problem if it is the finalized contract, but if revisions are to be made, then the person revising will have a different version compared to others whose drive has not been updated. This way, whenever a correction is made, each party can have modified version of the contract. The best way to avoid this pitfall is to opt for cloud-based online contract management software and allow central collaboration to edit the document.
#5 – Neglecting Auto-Renewed Contracts
It is not good to be too comfortable and neglect auto-renewed contracts. Although digital contracts can be auto-renewed with the use of contract automation, there might be some adjustments that can be missed. It can be possible that the company may allow outdated conditions to continue or continue longer than either party would like to without their knowledge.
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Internet and access to mobile networks have been an integral part of our lives. Yet, the only source we know to express our gratitude to is our respective internet service providers (ISP). People are dependent on their ISP’s to provide them with uninterrupted access to the internet and the network. Consequently, the ISP’s are also reliant on network service providers to offer them with bandwidth and network access. When the customers dial into an ISP’s network, it is connected to the internet provider’s network service provider. A network service provider provides all the infrastructure to keep up with the internet traffic demand. As a result, it is essential that ISP’s partner with the right network service provider to provide uninterrupted internet and network connection to their customer.
Supplier Selection Criteria for Network Service Provider (NSP)
In the age of globalization, it is essential to choose a network service provider that can consistently and reliably provide global coverage to cater to customers spread all across the world. NSP’s adopt various strategies to ensure global coverage. Some are global companies that already have a presence in multiple countries, while others partner with local providers to handle all their traffic. The problem with handing-off the traffic to local providers is that of availability and performance guarantee regarding latency issues. While choosing an NSP for your enterprise, it is essential to evaluate the partnership model of the NSP with local providers so that they can ensure a comprehensive network with consistent performance.
Ease of Business Dealings
Every businesses and enterprise will have different needs based on the industry they belong to, operating geographies, workloads, and business strategies. There is some network service provider who requires the clients to follow strict procurement and onboarding process offering little flexibility. Such rigidness may deem companies unable to cater to businesses or client’s specific needs. To ensure flexibility in service, companies should look out for NSP’s that are able and willing to customize processes, services, or tech support to meet the client’s requirement.
NSP with Connection to the Top Cloud Services Provider
The widespread adoption of cloud service model within the telecommunications industry is forcing the service providers to adjust their selection process of NSP’s. Partnering with the cloud service provider with global reach benefits the companies to have an active presence across the world. Additionally, it also allows them to easily connect to any network service provider just by adding another connection to the network.
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The constant influx of innovation in the field of sourcing and procurement has simplified the lives of supply chain professionals by eliminating burdensome paperwork and facilitating and automating both complex and simple tasks. E-procurement tools and various other procurement technology solutions significantly benefit the organization by allowing greater productivity, visibility, and cost efficiency. Although old-school techniques such as supplier relationship management and category expertise remain relevant today, the new procurement technology systems are transforming the way businesses approach contract management, supplier negotiation, reverse auction, and category management.
Given that the procurement professionals are always on the move and demand instant information, mobile procurement applications can empower them to drive greater results and value. Such applications help organizations streamline their procurement process with features such as on-demand notifications, purchase order creation, and real-time analytics from a mobile device. Procurement professionals can conveniently compare and request items from anywhere saving them time and providing them full visibility on suppliers.
Digital Signatures and Certificates
Digital signature certificates make the e-tendering process possible by its ability to access buyers information or services online and ensuring security. Digital signatures eliminate the lengthy paperwork and allow for contracts to be carried out within minutes. Additionally, such procurement technology can also facilitate automatic contracts and ease the RFP processes along with simplifying the purchase order.
Unlike traditional product or services catalog, e-catalogs are interactive and can store enormous quantities of items that can be organized and classified into different categories as per requirement. Electronic catalogs can be easily edited and modified on a recurrent basis and help convert inquiries into order resulting in substantial cost savings.
Migration to Cloud
Small and medium business enterprise are migrating to cloud technology to enjoy the benefits of procurement technology solutions without having to make heavy IT infrastructure investments. Businesses are opting for Software-as-a-Service (SaaS) model for their procurement needs. Such digital procurement platforms provide value that in-house solutions cant match. Also migrating to the cloud can reduce the overall costs and provide flexibility and scalability to the organization.
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In a quest to achieve supply chain optimization, organizations are looking for ways to implement effective supply chain management technologies. Organizations striving to attain a lean supply chain are also investing heavily in their IT infrastructure for supply chain management (SCM) applications. But with the advent of cloud technology, organizations can scale up their entire supply chain management system without having to pay a hefty price.
Why Cloud Technology for Supply Chain Management?
Cloud technology provides a host of benefits over the traditional supply chain management systems. Apart from cost savings, it equips the supply chain manager with real-time trackability and drives supply chain efficiency. In an era of stiff competition and rapid product innovations, a cloud-based supply chain management application helps the organization to react appropriately to dynamic customer demand and provide information on the centralized hosting of services. The organization benefits with improved supplier relationship management, high-quality data on vendors and suppliers, inventory management, and in-depth insights on increasing process efficiency.
How is Cloud Technology Changing the Supply Chain Management Landscape?
Big-Data Analytics and Automation
Today, supply chain management has witnessed a paradigm shift from the physical flow of products, services, and information to a digital business. With the availability of a significant amount of data and information to a supply chain analyst, cloud computing has accelerated the analytics capabilities in the supply chain management sector. It gives way for real-time inventory tracking, automates stock replenishment, automates item and quantity verification, and order validation. Cloud technology pushes the level of automation a step further by using machine learning algorithms, which can teach stock management system to predict and forecast order requirement.
Improved IT Capabilities
Implementing an integrated system requires a significant change in internal culture and employee reconditioning. Cloud technology enables the organization to use latest supply chain management systems without having to upscale their IT systems and has 24/7 support system without allocating a lot of human resources.
Flexibility in Adjusting to Market Volatility
Cloud technology acts as a buffer against market volatility as it enables the organization to scale up or down the level of services and the customization required. It prepares the organization for rapid expansion in their practices as cloud service providers provide the necessary level of services.
Many companies adopting cloud services to manage their supply chain functions with planning, forecasting, procurement, and logistics functions are the first to move to the cloud. As a result, service providers are keeping a close eye on the dynamic needs of the current supply chain management practices and responding to innovations occurring in the industry.
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Agility is often defined as the ability to think or move quickly. But in procurement terms, we can define it as a procurement process that is highly visible, flexible and mobile. It is very essential for the organizations to have an agile supply chain and procurement process. When an organization tries to achieve procurement agility, it is crucial for the management to identify and comprehend the ways to fulfill the ever changing needs of their stakeholders.
Agility in Procurement – The Questions You Should Ask
By building an agile procurement process, businesses can face new challenges and create avenues for opportunity in the globalized economy. Organizations that have a robust procurement function in place gain a competitive advantage over their competitors in terms of people, finances and processes. At this juncture, it is important for supply chain professionals to ask themselves a few questions,
- Does the procurement team have the necessary skill and knowledge?
- Have we incorporated best-in-class industry practices within our supply chain practices and processes?
- Does a cross functional link exist within our organization or are they functioning as silos?
- Can we leverage supply market insights and knowledge of potential risk factors to gain competitive edge over others?
- Do we have a business-continuity plan in place to face various supply chain risks?
How to Drive Procurement Agility?
For a successful transformation, the management has to ensure that agility is to be woven deep into the organizational fabric and its operations. But why do the companies need this transformation, you ask? In this dynamic market landscape, the processes keep changing rapidly right from the technology to people, therefore making it crucial for the management to follow the best-in-class practices to keep up with this dynamic market conditions, innovation and competition. But how is this possible? Here’s how.
- Prioritizing skills, enabling cross functional communication and streamlining processes by adopting technology to redesign and develop supply chain transparency.
- Adopting digital transformation, building a robust cloud infrastructure, creating a paperless environment and a virtual business network, and other capabilities that drive business agility.
- Focusing on activities that add value rather than those meant solely for transactional purpose, thereby freeing up resources to address strategic business needs.
- Leveraging data-driven market intelligence and predictive analytics by investing in cloud infrastructure and adopting digital technologies to gain a competitive advantage.
- Last but not the least, investing in talent acquisition and development, building their analytical skills and expanding their knowledge base, and creating a plan to retain talent within the organization by incentivizing and compensating them for their efforts and achievements.
Procurement agility is a key step to achieve business success. Thus, organizations can achieve this by ensuring the processes are clearly visible, flexible and highly mobile. In short, to keep up with the changing dynamics the procurement professionals must develop an agility agenda to achieve organizational objectives. At SpendEdge, we provide supply market intelligence and spend benchmarking analysis among a wide range of solutions that help companies to make strategic procurement decisions, understand price trends and its impact on the overall spend and thus drive profitability.
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