Contract lifecycle management (CLM) pertains to the process of managing an organization’s contracts from initiation to execution.

Deciding on a contract lifecycle management (CLM) toolset is critical to an organization and should be a decision that Legal is fully overseeing alongside Finance and Procurement. The cross-collaboration between these teams will ensure that all topics are thoroughly covered and eliminate any potential gaps.

Creating The Contract Process 

Creating your contract process will be critical in new supplier setup and customer onboarding. This detailed outline will provide the foundation of every contract and ensure timely, adequate contract initiation for all parties involved. Create a business requirements definition (BRD), and it includes the following factors: 

• Procurement and business owner obtain closure on business terms with the supplier

• Go through infosec process for any data security concerns (Legal or Infosec team) 

• Submission to legal for review and decide on utilization of supplier or company paper 

• Draft the contract and all requirements 

• Redline contract as needed for required revisions 

• Get closure with supplier 

• Esig workflow for signatures and include summary/risks to share with internal team

• Upload all key meta data in CLM for contract tracking (end date, supplier #, etc.) 

• Measure contract cycle time (legal submission to contract execution) 

Alongside the business requirements definition (BRD), you will need sourcing criteria to consider for the CLM:

• Fit to Need Functionality 

• AI Capability 

• Analytics 

• Triggers 

• Ease to Implement Toolset 

• Customer Support 

• References 

• Supplier Financial Stability 

• Cost

You don’t necessarily need to have redlining as part of the contract lifecycle management (CLM) functionality, rather Microsoft Word or Google Docs with revision management will be a viable solution. The main point that you need to emphasize is that the supplier number is in the CLM tool and you can use it within the Procure to Pay (P2P) system. This ensures that integration is capable between the P2P and CLM toolsets. 

Optimizing Your Contract Lifecycle Management (CLM) 

Contract lifecycle management (CLM) can be difficult for companies to execute thoroughly. With all of the gaps that can be left in contracts, you don’t want to fall victim to leaving out key details that could financially impact your organization. Therefore, seeking outside counsel to oversee contract initiation to execution will be the best method for optimizing your contract lifecycle management (CLM). 

---

Mike Glass runs GPC (Glass Procurement Consulting), a procurement consulting firm focused on optimizing a company's spend.  Mike has worked in senior procurement management positions at NVIDIA, Google, Meta, Fitbit, and Flextronics.  Mike would enjoy getting your insight on any procurement topic, feel free to contact Mike at mike@glassprocurementconsulting.com.