Mind the gap - the reality of good contract management

Blog, Practice guide

While the level of spend under contract varies by sector and category, in most organisations at least 50 per cent of all third party spend is governed by contracts, or legally binding agreements between the parties to offer – and accept – goods or services.

Despite this, many organisations do not have clear contract management practices or roles and responsibilities, with supply chain relationships being managed in an ad hoc and sporadic fashion. Best in class contract management arrangements involve the continuous evolution of the contract, building and sustaining excellence within client-supplier relationships and an ongoing assessment of whether the terms of the contract and service delivery mechanisms are right for both parties.

It is estimated that the lack of robust contract management practices within organisations costs the UK hundreds of millions of pounds in lost savings opportunities each year, and procurement functions have a key role to play in plugging this gap.

This best practice guide highlights some of the key challenges – and opportunities – facing procurement teams as organisations try to get the most out of their contract and supplier relationships, and identifies some of the levers and tools readily available to support effective contract management. 

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Mind the gap