Buy. Buy. Buy. Purchasing agents have all the fun! Or do they? Procurement managers are experts at negotiating contracts based on manufacturing forecasts. No doubt this type of negotiation is both an art and science. But it can also turn into frustration (and worse) if the “after the fact system” isn’t efficient.
How easy is it for these managers to measure what was actually produced against the price concession given to the vendor? What happens to the bottom line when these don’t match up? How quickly can adjustments be made? And, if there is no opportunity to adjust the current contract, how much of this knowledge can be used for future forecasting and future contract negotiations?
Along those same lines, what if the contract also has a penalty for not meeting the agreed upon purchase volume? How is that financial risk forecasted, measured, reported, understood? In many cases, companies do not have this type of contract intelligence available, which can lead to a few surprises. And, these types of surprises don’t typically sit well with CFOs.
Then there’s the whole vendor relationship to consider. Moods can shift quickly from collaboration to protectionism when profits are at risk. Companies that have systems in place to proactively manage obligations vs. reactive post-mortem analysis are better prepared to make current and future decisions which preserve and enhance vendor relationships as well as bottom line profits.
If your current contract management system is hindering the effectiveness and insight of your purchasing experts, then change that today with a rules-driven, compliance solution to manage obligations and mitigate business risks. Click here to contact us and schedule a product demonstration.