Amid the current global crisis, supply chains across the world continue to be disrupted and forced to reevaluate their supplier base. As organizations are tasked to source new suppliers to partner with, procurement and legal teams are facing immense pressure to quickly create, negotiate, and approve contracts. However, many of these organizations rely on manual contract creations and use tools, such as Microsoft Word, to create their contracts from start to finish. In a recent report, PayStream Advisors reported that “while a majority of organizations have a dedicated team that manages contracts across all departments, only 27% of respondents are using CLM software.” Procurement organizations need a solution that will allow them to quickly create quality documents and manage the whole contract lifecycle. But by not using Contract Lifecycle Management (CLM) software, this can quickly translate to reduced visibility, unnecessary risks, and decreased productivity within your procurement and legal teams. Here are a few ways in which a sophisticated CLM solution can benefit an organization that routinely creates, negotiates, and executes contracts.
According to the Paystream Advisors survey, “only 19% of respondents said they are using the authoring tool of a CLM solution.” Manually creating a contract from scratch can be a very long and painful process if users do not have the right set of tools to create them. Using CLM software streamlines the contract creation process so users can easily and quickly author contracts using templates with pre-approved language, which in return increases the velocity of the negotiation by standardizing the contract process.
Oracle Procurement Contracts Cloud provides procurement and legal teams with the tools they need to expedite their contracts. To start, the wizard authoring tool guides users through every step of the authoring cycle and proposes which templates the organization should use depending on the category they are negotiating. All language pre-populated within these templates has already been approved by their legal team, which speeds up the process since they don’t have to involve their legal team every time. Users can also export the contract in Word while drafting it, so they can easily evaluate and make edits to the document. Once all the updates are complete, users can upload it back into the application where it automates the redlining by highlighting any deviations from the standard. This lets lawyers save time by focusing on what’s changed so they review less and can quickly sign off the document. Also, Oracle’s integration with DocuSign speeds up cycle times by avoiding the need to send contracts back and forth for physical contract signatures.
Another big component of procurement contracts is allocating and mitigating potential risks. Contracts are living documents that need to be continuously managed as they provide barriers against risks because of the language the document contains. It is critical for organizations to effectively maintain them and make sure that these documents have the language to safeguard against any potential risks and disruptions. Especially during today’s climate, organizations need to be able to efficiently manage their contracts and strategically review their contractual terms, understand the relationship with their suppliers and potentially update their terms in order to ensure their contracts are in a healthy state. Oracle Procurement Cloud identifies any deviations that have been made to a contract and notifies users which contracts require special attention so the contract goes through the right reviews and approvals. During the authoring process, users can use the clause library, which contains language that has already been approved by their legal team, to enforce business policies and ensure contracts are created in compliance with an organizations’ standards. When a contract is about to expire, the application sends users renewal notifications in order to avoid any contractual risks.
An important aspect of contracts is the storage and organization of them in a single location. When an organization has hundreds of contracts to keep track of, it’s hard to stay on top of each document. According to a recent report by Ardent Partners, only 62% of organizations store their contracts in a central repository, compared to organizations that use best-in-class platforms at 76%. Often, a procurement organization will negotiate and sign a contract, only for it to be stored away in someone’s filing cabinet at a different department and never to be found again. For contracts, it is unacceptable to not know their exact whereabouts; if they are scattered, these contracts cause higher risks. This is where an automated platform adds value. CLM applications provide a centralized location where stakeholders can access contracts if required. Oracle Procurement Contracts Cloud provides organizations with a centralized, searchable repository that is easily accessible to any stakeholders that have the appropriate credentials. The application provides extensive search capabilities, such as text and string, so they can find the contract that they need and spare the organizations’ time from having to chase a contract down.
In the race to expedite contract generation, a CLM application like Oracle Procurement Contracts Cloud provides organizations with the tools they need to standardize the contract authoring process so they can quickly create compliant contracts and improve the productivity of procurement and legal teams, mitigate unnecessary risks such as additional costs and contract leakage, and increase the visibility into their overall contract lifecycle.