Why Contract Management is so Important
When retailers and manufacturers agree to do business buying/selling products, they create a contract that outlines the activities and terms that each agrees to fulfill. Contracts undeniably affect profitability due to their emphasis on processes that drive revenue and expenses.
...Yet So Mismanaged
Yet, most organizations often have no idea how to easily locate their top 50-100 contracts. Moreover, they don’t know off hand whether all are up-to-date. Many have countless contract templates, each with its own language and terminology, dealing with varied and differing circumstances. And often, companies have no idea if their buyer or vendor is following the agreed-upon terms, or whether so-called “tribal knowledge” taken over introducing informal arrangements.
...Yet So Costly
When the process is manual and disorganized, retailers and manufacturers lose time, put undue stress on the organization and waste expensive resources. And no one knows for sure whether financial results are correct. All of this adds up to profit loss that can be easily mitigated with a software-based contract management solution.
What We’ve Learned
At goTRG, we’ve been working with retailers and vendors for decades. We have seen the challenges from both sides. That’s why we created a platform that helps organizations optimize contract management and improve their partnerships with ease. For companies with thousands of contracts, undefined processes, and confusing terms, transitioning to contract management software significantly improves the experience, reduces risk and boosts their bottom line. Retailers and manufacturers must take an honest look at their contract management headaches and resolve to shift to a unified and transparent platform.
1. HEADACHE: CONFUSING TERMS
Contracts form the basis of a retailers relationships with its vendors and vice versa. Yet, they often get it wrong. One of the biggest headaches in establishing clear terms, is the Return to Vendor (RTV) clause.
Most retailers enter into contracts with vendors who establish rules and percentages of returns allowed or allowances in lieu of returns. These can be a huge points of confusion and contention as both sides seek to make the most profit with as few returned items as possible. On top of that, retailers and vendors struggle to communicate and track the process of a many-to-one store return occurrence. And we all know that returns are an indispensable part of the customer experience that is not going away.
As global supply chains become more complex, such poorly managed contracts can become a major hindrance as retailers needlessly spend many millions to process and transport products with severely diminished value. This results in investing far too much for too little return, which is why smart organizations are seeking tech-driven solutions.
With goTRG’s RTV contract module, companies can manage terms directly on the platform. This can help prevent time wasted and lack of transparency. Having clear and executable terms can also ensure returns are shipped correctly at the right time. With goTRG’s platform retailers and OEMs can have a complete view into their terms, enabling access to a single source of truth and a shared workspace as they gain insight into their entire supply chain.
2. UNWANTED EXPIRATIONS & RENEWALS
Thousands of contracts, saved in thousands of folders, with no process of accountability, is an all-too-common recipe for disaster. In such cases, retailers may have no idea if their contracts are still in effect, expired, or contain the most optimal terms.
As simple as it seems, unwanted contract expiration is a major issue that every company from small to enterprise level continues to deal with. This issue can cause serious damage to a company’s profit potential. When companies have to restart contracts from scratch, they can spend hundreds of thousands of dollars on the work required to create a new one.
goTRG’s smart contract management software monitors these important dates and alerts stakeholders when they must take action. The notifications give companies time to prepare and employ the resources to manage renewals and ensure the terms meet their needs.
3. ZERO VISIBILITY
At goTRG, we constantly consult with retailers and manufacturers about their biggest headaches related to contract management. Invariably, every one on either side of the relationship points to lack of transparency. Unfortunately, companies create this challenge for themselves when they don’t have a unified program to consolidate contracts across various departments.
For example, some retailers have minimal systems support to their contract management efforts and rely on saving contracts to their inbox. Others save may them to local shared drives or even in filing cabinets scattered across various business units and floors. Later, when issues arise that require review, these contracts can be impossible to find. That’s probably why organizations said contract validation “task automation” is their second biggest motivation to use AI technology.
goTRG’s AI-based contract management software gives instant ease of access to organizations, enabling them to make better decisions faster. All contracts are digitized, uploaded, and easily searchable for members of the organization. Using a single platform, visibility goes from department level to global level. Changes required to deal with evolving market circumstances are captured and visible and not carried around in the heads of experienced teammates. Often such manual changes can be in effect long after the circumstances that required the original change have changed again.
4. TEMPLATES ON TEMPLATES
For every new contract, organizations without a streamlined contract management process spend countless hours writing each template from scratch. Improvised contract writing also means companies must keep track of a plethora of unique clauses. This is a huge waste of time and resources that leaves organizations open to liability.
When contracts are not uniform, legal departments must read each line to ensure the language doesn’t expose the company to risk. On the other hand, when companies use contract management software they can reduce and streamline the number of templates to keep track of.
In fact, one of goTRG’s largest enterprise clients was able to reduce its contract templates from 10K to less than 200. That means improved visibility, reduced risk, and less time spent in writing from scratch and searching for potential liability later.
5. HUMAN ERROR
When organizations don’t use an integrated system to manage contracts, they leave themselves open to a variety of time-sucking inefficiencies that can cause detrimental errors. For example, without an easy way to pull data from other systems and enter them into contracts, retailers and manufacturers are doubling up on data entry. This manual process wastes times and almost guarantees human error will occur in writing or amending contracts.
Contract changes are also open to error when they don’t take account of the “tribal knowledge” processes referred-to earlier that have crept in over time superseding or altering contract administration with what “the real processes are”. Contract changes in such environments are bound to lead to human error as manual work-arounds substitute for the actual contract language.
goTRG’s best-in-class contract management software integrates with client’s ERPs, CRMs and other major systems to virtually eliminate doubling and tripling on data entry. This allows organizations to automate inefficient processes and continue working in the software that its workforces is adept at using. It also forces visibility and transparency to required changes so that contracts stay accurate, up-to-date and beneficial to both parties.
Inefficient contract management wastes time, money, and resources. Luckily deep-data, enterprise level technology exists that can easily streamline processes, reduce the margin of error, save time, and ensure each organization’s terms are in their best interest.
To learn more about goTRG’s contract management, contact us for a free consultation today.