Get The Most Out Of Every Vendor Agreement
Your vendor agreements are the most important part of your relationship. They define terms and prices, give a framework to resolve disputes, and describe how one party can cancel the agreement with the other. It is common, however, for these agreements to be incomplete or contain errors. Here are some typical issues with vendor contracts:
- Inadequate Termination Language – When one party controls the contract process, they typically control how the contract can be terminated. This leads to companies being forced to continue a disadvantageous agreement. Also, when termination isn’t clearly defined, the exit process isn’t defined which leads to confusion when the contract does terminate. This can expose confidential data about your company and your customers.
- Unclear Roles And Responsibilities – Most vendor contracts use generic language ads as a way for the sales teams to speed up the process, but this usually results in unclear definitions of the role each party plays.
- No Dispute Resolution – Not all agreements go according to plan and unforeseen circumstances can result in poor performances, poor quality of materials, or even undelivered products. A good contract will define how these disputes can be resolved.
How Your Company Can Protect Itself
Your purchasing staff is responsible not only for procuring materials needed to produce your products, but it must review any gaps in the supply chain that may affect your ability to deliver your product. This all starts with your vendor contracts. If you don’t already have an automated purchasing solution like Proactis, your purchasing staff is probably bogged down in time-consuming paperwork which means they use as much effort as they would like on contract management. It is important to have a process that continually reviews the effectiveness of your vendor relationships and the key to this is constant re-evaluation of your vendor contracts. This is where a comprehensive contract management software solution can be used to maximum benefit.
Companies of all sizes need to take vendor agreements seriously.
Which is why a comprehensive contract management program is essential.
The Proactis Solution
Proactis Contract Management provides a central electronic repository for all types of supplier contracts, with links to purchasing systems that make them fully visible to buyers. This program helps you increase the proportion of spend “under management” and “on-contract” by providing improved visibility and control of contracts throughout the contract lifecycle.
Proactis does this by:
- Ensuring that the organization consistently utilizes established contracts when buying goods and services.
- Providing a central electronic repository for all types of supplier contracts, with links to the purchasing system that make them fully visible to buyers.
- Automatically collect purchase and delivery activity for analysis of supplier performance and buyer commitments.
- Continually monitor contract dates and other criteria, alerting the appropriate people when reviews or actions are needed.
- Identify suppliers in high-risk areas and provide allowances for unforeseen circumstances such as political unrest and natural disasters.
- Review terms and conditions periodically and notify contract administration when they need to be changed or reviewed.