Contract Management Technology for Manufacturers During Supply Chain Disruptions
Persistent supply chain challenges continue to weigh-on manufacturers and there have been very few signs of relief. Each week seems to bring a new chapter in the current supply chain disruption, whether it’s a factory shutdown, a canal blocked or a labor shortage. To counter this instability, manufacturers are taking a variety of approaches:
- Sourcing: move from a sole source to multi-source model to diversify the vendor network
- Negotiation: leverage stocking agreements to help reduce price variation
- Pricing: raise prices, which is always a last resort, since it makes a company less competitive and punishes consumers
Larger manufacturers have been able to navigate instability—and minimise negative side effects like price increases—by employing a combination of tactics. Many smaller manufacturers have fewer options, generating a great deal of uncertainty. All manufacturers are looking for other viable options.
Contract management tech gives manufacturers more agility
Today’s manufacturers must be agile, regardless of size or the supply chain and operational strategies employed. They need to be able to respond in real time to the changing global supply chain and political environment. One tool that augments each of the approaches above is contract management technology, which can make the difference between which manufacturers thrive and which struggle to survive.
Contracts can either play a big role in addressing instability or be a big barrier to executing quickly. Regardless of which approach a manufacturer takes to manage the impact of supply chain disruption, digital contracts are a critical tool to help operate more efficiently and effectively, providing the agility to respond to changes as they happen.
Here are a few critical ways contract management help manufacturers get ahead:
- Onboard vendors faster: In many industries, onboarding is already tedious and may include going through pre-production processes like fit samples, lab dips, mould creations and rigorous QA. The ability to generate, execute and act on contracts in days instead of weeks or months is a big competitive advantage.
- Update master service agreements (MSAs): Negotiating MSAs can be difficult with redlines going back and forth. Digital contracts significantly speed up this process.
- Feel confident in big changes: Making major changes to the supply chain involves a lot of people and complex contracts. Using digital workflows and routing automates much of the paperwork involved, so every detail is visible to legal, operations, finance, sourcing and other departments to get work done more quickly.
- Eliminate errors: The ability to require fields ensures busy executives don’t forget to provide required information. It also eliminates the need to go through contracts multiple times because of errors, incomplete information or change requests.
As you develop your supply chain strategy in today’s ever-changing geopolitical climate, contract management is a must-have tool that is easy for companies of all sizes to implement.