Maximizing Value in Supply Chain Management through Diligent Contract Administration

Companies are grappling with increasingly large volumes of contracts generated by both buy side and sell side activities. Contract Lifecycle Management (CLM) must deal with disparate contract workflows throughout the buy, sell, operational and legal functions, as well as with the challenges inherent in managing contracts across stakeholder, demand and supply activities.

A successful CLM model will analyze needs and priorities, document requirements and leverage best practices – while also developing solutions to address areas of non-compliance that have been identified. Proactive Contract Administration as part of CLM is critical to realizing the full value generated by your supply chain management function.

Applying an Auditor's Lens

Revenew's proactive approach to Contract Administration is unique as we apply a Contract Compliance Review and auditor's lens to the function. Our method includes:

Contract Language Risk Assessment to implement industry-leading language and commercial terms while minimizing exposure to risk

Contract Scorecards to regularly monitor and communicate performance

In-depth invoice reviews which identify recovery opportunities in real time

Assessment of contractor and subcontractor compliance to all contract provi- sions (co-employment, background checks, I-9 certification, safety, insurance/ training requirements, commercial pricing schedules and more)

Management Action Plans to ensure that corrective actions are being taken

Key Stakeholders Communication Plans to report on progress, gain support for implementing corrective actions (change management) and provide direc- tion on areas of focus

Return on Investment as we capture, correct and record contract leakage

Nearly 65% of enterprises surveyed reported that Contract Lifecycle Management has reduced exposure to financial and legal risk when properly administrated.”

Source: Aberdeen Group

The Role of Contract Administration

Diligently-managed contracts dramatically reduce non-compliance, identify leakage early, eliminate errors going forward and accelerate return on investment – in many cases capturing millions of dollars in lost savings. Involving all key stakeholders ensures that these significant results are achieved with no impact on project schedules.

1CaseStudy

In this case, clearer definition of “effective date” yielded a

 

 

 

$250,000 settlement and future savings. Our client signed

 

 

 

a contract with a key supplier that resulted in a significant

 

 

 

 

price decrease. The cover sheet was dated January 1,

 

 

 

 

2015. The body of the contract contained language

 

 

 

 

stating an effective date of November 1, 2014, though

 

 

 

 

the term “effective date” was not defined in the contract.

 

 

 

 

The supplier's position was that the lower prices should

 

 

 

 

go into effect the day our client signed the contract:

 

 

 

 

March 1, 2015. Our client, however, was expecting the

 

 

 

 

decrease to take effect on the stated effective date

 

 

 

 

of November 1, 2014. The price difference amounted

 

 

 

 

to $500,000 for the four-month period in question.

 

 

 

 

Revenew identified this issue and helped our client achieve

 

 

 

 

a recovery settlement of $250,000. Our team also pro-

 

 

 

 

vided specific language to be added to our client's master

 

 

 

 

purchase agreements defining the term “effective date” –

 

 

 

 

and maximizing savings on future contracts.

 

 

 

Revenew's Performance Improvement services produce hard-dollar results for our clients — specific, tangible and often quite substantial. Please contact us today at

281-276-4500 or info@revenew.net to learn more. You have everything to gain.

www.revenew.net

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