Contract Management and Manufacturing: On Industrial-Specific Use Cases for CLM

- July 14, 2014 10:30 AM
Categories: Contract Management, Supplier Management | Tags: ,

Many questions we get regarding contract management suggests that most practitioners and consultants think of contract lifecycle management software as a somewhat generic set of capabilities that work across industries without significant tailoring, customization, or configuration. But in fact there are a number of specific use cases for manufacturing environments. These include addressing general contracting issues such as price changes — escalation/de-escalation and related clauses, base currencies, assignment rights, and related areas.

But there are also more advanced use cases in manufacturing, such as technology for multi-tier contractual analysis using a range of automated approaches to collecting, organizing, and incorporating contract data, especially in direct side procurement with strategic suppliers, across supplier engagement, negotiation and on-going monitoring/management and development activities. In these opportunities on the buy side, a number of the more advanced use cases we’ve seen are focused on driving supply chain flexibility through taking advantage of spend and pre-negotiated clauses further upstream with sub-suppliers and sub-sub-suppliers.

By tying contract development and management activities to bill of materials visibility, the ability to develop and manage demand aggregation activities – loosely or even directly via a buy/sell approach – presents a great opportunity to build visibility into risk elements and develop a clear mitigation and management strategy. Chain of custody represents another area, and with Dodd-Frank (conflict minerals) finally becoming an implementation reality, incorporating clauses and active management directly into contracting lifecycle activities presents a case not just to drive compliance, but also to reduce administration and oversight costs.

Manufacturing organizations have a strong opportunity on the sell-side as well, including looking at supply chains in terms of client needs. This can include matching capabilities based on known supplier capabilities/agreements, chain of custody requirements, and product content declarations.

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