improve supplier contract management

Supplier Contract Management Improvement: Best Practices and Ideas

Today, organizations have tens of thousands of vendors selling and using their supply chain. For example, the French Energy company, Total, as of 2021, had over 150,000 suppliers under contract. Each one exposing them to risk, each one exposing them to malpractices, each one exposing them to exhaustive and expensive logistics. How many suppliers are under your wing? How many do you need to operate? 

Today, thanks to tech, companies are coming up with better and more streamlined solutions to this maze they have constructed. Improved and flawless supplier contract management systems and products can help drive your organization forward, save you a lot of headaches, and strengthen relations with your vendors. In this blog, we’ll discuss what supply contract management software is, some of its benefits, and how you can better your metrics by making the jump and stepping into the future. 

What are supply contracts and supplier contract management? 

A supply contract is an ironclad, sometimes extremely complex, agreement in which a third-party vendor, a supplier, or some service outside your organization’s main infrastructure agrees to give you certain goods and services — whether it’s an exclusive contract or not depends on the agreement.

The moment this happens, that supplier is an integral part of your supply chain. You’ve linked them up for the time being, at least until the contract’s lifecycle runs out, to your business. That means that your reputation, your risk exposure, and your revenue streams are tied to how well they do their job. How well do they comply with the lettering of the contract. 

Meanwhile, supply contract management is the process of supervising and controlling those agreements. The goal is to make sure that the supply of goods and services is always available to satisfy the needs of buyers. And that the terms, conditions, and pricing for their ongoing relationship benefits both parties. It also defines when the relationship ends, or a contract negotiation needs to take place. 

the process of supplier contract management

Supply contracts are often used by buyers to make sure that they have enough supplies for a specific period in time. For example, if there are no suppliers in the area who can provide what they need, then they might use a supply contract to buy from another company for a limited time period until they find someone locally. In other words, some are periodical — for example for the holiday rush. 

Supplier contract management is an important part of any company’s supply chain. It’s not just about making sure the company has a good relationship with its suppliers. It’s also about making sure that they get the best prices and terms for their products and services.

Supplier contract management, when efficiently implemented, helps companies negotiate more favorable terms with suppliers, leading to substantial cost savings. It goes beyond simply hammering out contracts with suppliers; it involves continually assessing and refining contracts to ensure they remain in line with the company’s evolving needs and market dynamics. As such, diligent supplier contract management ensures businesses achieve maximum value from their supplier relationships.

Additionally, effective supplier contract management enables better supplier performance management. It facilitates the tracking and evaluating of supplier performance against set contract terms and goals, leading to improved quality, efficiency, and reliability.

In essence, the better your supplier contract management process, the more significant your benefits in terms of cost savings, risk reduction, regulatory compliance, and supplier performance. This, in turn, translates into a more resilient supply chain, improved competitive positioning, and ultimately, better business performance.

The better your supplier contract management processes are, the more likely you are to be able to realize these benefits.

Supplier contract management best practices and improvement ideas 

Here are some tips on how to better manage your supplier contracts


By using CLM – Contract Lifecycle Management – software you’re assured that all contracts are supervised, you reduce the time of negotiation, and more importantly, you save money on your staff. This type of software does everything for you. They live on the cloud, store your contracts on it, use cutting-edge blockchain tech to bypass e-signature and ensure safety protocols, notify you when there’s a compliance issue – good or bad, and even renew contracts for you


The most tedious and time-consuming task, when it comes to supply contract management is writing them up. Finding the right nomenclature, the right legal bylines, and the right wording. It’s important to establish a library with preconfigured supply contract templates. Pre-written contracts that you can dig out, tweak, and partly rewrite.


Long gone are the days of sprawling file cabinets. Today, everything is digital and in the cloud. Make sure all your supplier contract management processes and agreements are on the cloud. Easy to access by anyone within your organization, easy to verify, and, more importantly, easy to search for. 

managing supplier contracts


Stay on top of your supply contract’s performance. Compliance and making sure your vendors are sticking to their agreement is a 24/7 job. With CLM software, you can outsource this sentry duty, and have an AI take care of it. They’ll notify you when something is off, and in some cases, they can even hold off payment until that hiccup is fixed. 


Set reminders, alerts, and other dazzling flags that remind you of important milestones. Not only tasks have been completed, but also that certain stages – in the contract’s lifecycle – have been reached. This includes automatic contract renewals. 

Benefits of supplier contract management software 

Supplier contract management helps companies simplify the process of managing supplier contracts and ensure that they can get their desired products at the best prices, and with almost no hassle.

Benefits of supplier contract management software:

  • Supplier contract management software helps companies maintain their relationship with suppliers without having any issues.
  • It also helps them to get the desired products from their suppliers at lower prices.
  • The risk of getting stuck with a bad vendor is reduced.
  • Notify you of milestones.
  • Reduce cost when it comes to staff members dedicated to contract supervision. 
  • Remind you of contract renewal.

By implementing CLM software in your supplier contract management exercise you reduce your company’s exposure to risks associated with getting into bed with a vendor. You minimize issues, streamline solutions, and more importantly give extra time — time you can deviate to other aspects of your business, or simply time you might need for some much-needed relaxation. 

How useful was this post?

Click on a star to rate it!

Average rating 5 / 5. Vote count: 2

No votes so far! Be the first to rate this post.

Share this: