Contract Management in SaaS: Accelerating Digital Transformation
2020 has seen a significant reset in how manufacturing enterprises enable contract management to keep the supply chain moving. At the heart of the global supply chain disruption in manufacturing and the change in OEM-supplier relationships’ status quo. In March, China had reported issuing 4,811 force majeure certificates that put manufacturing contracts worth USD 53. 79 billion at stake. This means that approximately 28% of the global manufacturing value chain that is locked in suboptimal direct procurement contracts need to be revisited.
2021 will see stakeholders in the manufacturing supply chain investing in digital solutions that enable superior compliance, traceability, mobility, and collaboration.
A large number of manufacturing enterprises will expect improvement in transparency in supplier relationships, innovation cycles, and multi-year contracts. This will put them on a learning curve for greater technology adoption.
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Trust building between OEMs and suppliers is the glue that holds the entire supply chain together. In 2021, OEMs will move away from transactional supplier relationships to strategic ones. The adoption of contract management SaaS is likely to be the first step towards achieving this end.
Manual, offline, and siloed contract management processes will give way to contract automation platforms. This will allow enterprises to increase asset efficiency and reduce time to market, manufacturing cycle time, and order backlogs.
Effective contract management is also integral to innovation and new product development. Rolling out innovative manufactured goods in the market is largely dependent on suppliers’ ability to churn out spares, parts, and components within delivery timelines stipulated in contracts.
Manufacturing enterprises will be keen to push through new product development initiatives in 2021. They will rely on contract automation to ensure improved transparency and better collaboration with suppliers. Consequently, contract automation will see a more significant influx of artificial intelligence, machine learning, and superior analytics.
In 2021, Manufacturing enterprises will approach contract management with extra caution and aim to make direct procurement contracts responsive to risks. Manufacturers will look out for events like the rollout of the vaccine for COVID19 BREXIT, the U.S trade policy, and the evolution of environment-sustainability-governance policies. These factors are likely to impact direct procurement contracts over time. Moreover, manufacturing enterprises will demand agile and cloud-native contract management solutions. This will allow them greater elbow room for recourse and risk mitigation for multi-year contracts.
Jigyasa Kishore is Global SaaS Leader at Moglix
To learn more about manufacturing and supply chain trends in 2021, download our ebook titled Road to Self-Reliant Manufacturing: Procurement and Supply Chain Insights for 2021 here.