Is Your Procurement Team Best in Show?
Actually, “Best in Class” is the term they use in Aberdeen Group’s report Contract Management Benchmark: Procurement Contracts. To make the grade, you need to have clearly defined and enforced procedures and policies, using automated systems company-wide as well as standard contract language. You also need to have 90% compliance between your purchases and your contracts. Does this sound like you?
Unfortunately, according to Aberdeen, only 1 in 5 make the grade.
Some of the more interesting revelations in this report are:
- It takes 20 to 30 days on average, for a company to create, negotiate, and finalize a contract after the initial sourcing cycle is complete
- About 80% of companies are still using manual processes (with maybe the odd Access database thrown in)
- Only 17% of companies have one part of the business specifically designated to manage procurement contracts
- About 27% plan to invest in a commercial contract management solution within 24 months
- Pressure to better assess and mitigate risk is the key driver for contract management initiatives
In other words, as Aberdeen puts it, there are “tremendous opportunities for improvement” in this area. Not just opportunities. Tremendous opportunities.