Optimizing and securing the contracting process

It is said that ‘contracts are the lifeblood of any business’ – and it is certainly true that without contracts, many businesses would be seen as having no value and with poorly managed contracts – well, there would soon be no business.

Yet while winning and performing contracts is so critical, the contracting process frequently fails to support the steady flow of blood that is essential to its health. Consider for a moment the many blockages that occur – pain points, friction points, delay points – call them what you will, the process rarely runs like a well-oiled machine.

In a recent study, World Commerce and Contracting identified more than 40 ‘friction points’ in the average contracting process – each of them a frequent source of cost and delay. That same study indicated why they often prove so disruptive – it’s because there are very few organizations where someone, some group or function, is responsible and accountable for the quality of the process. Responsibilities are fragmented; data is fragmented; resources are fragmented; and different people have different views of what is important. The result, not surprisingly, is that there are tremendous opportunities to ‘optimize and secure’ the contracting process.

Does this matter? Is it worth caring? The answer is yes, but the benefits to be achieved are highly variable. The type of contract and the industry sector are the two big factors, both in terms of direct costs and consequential losses of revenue or potential savings. The study suggests a typical range from as low as 0.5% of contract value up to 15%+.

It isn’t just financial benefits that matter. Reduced cycle times, greater ease of doing business are two further incentives to streamline contracting. And with the growing availability of technologies that support digitization, this improved blood-flow is certainly achievable.

To discover more, connect to World Commerce & Contracting’s TASK program – a free to members offering that can be accessed at https://www.worldcc.com/Resources/TASK – and don’t forget to watch out for our imminent report on understanding and eliminating friction points!