Today, manufacturing is driven by automation. According to the McKinsey Global Institute, 64 percent of all global manufacturing-related activities could potentially be automated as of 2015. “These figures suggest that, even though manufacturing is one of the most highly automated industries globally, there is still significant automation potential within the four walls of manufacturing sites, as well as in related functional areas such as supply chain and procurement.”
One aspect of manufacturing that bears particular promise for automation is the contract lifecycle. With regulatory and compliance challenges on the rise and digital business expecting faster lifecycles, manufacturers can’t afford to dedicate manual attention and effort to contracts. Fortunately, leveraging a contract lifecycle management (CLM) tool, such as DocuSign’s Agreement Cloud or Conga Contracts, can solve that problem for them.
Regulatory and compliance challenges are increasing
In this digital age, companies are under more scrutiny than ever, and agencies are continually watching for any violations—intentional or otherwise. Manufacturers need to stay constantly aware of the laws and regulations of the regions and sectors in which they do business or else pay gratuitously. From 2014 to 2016, alone, violations of the U.S. Foreign Corrupt Practices Act (FCPA) resulted in companies paying over $89 million in fine settlements.
With 60 percent of all corporate litigation taking place over contracts, businesses must take great pains to manage their contracts—after all, it’s much more difficult to fulfill the terms of a contract if you are unaware of its contents. And knowing the contents becomes much more difficult when your contracts go missing, as 12 to 15 percent of all contracts do.
The digital age necessitates a faster lifecycle
In a study commissioned by Fujitsu, 77 percent of manufacturing executives expressed their belief that, due to the challenges posed by digital disruption, there is a strong need “for their organization to move faster to stay relevant in a digitalized world.”
However, speed is difficult to obtain when manually producing contracts. Not only is the process itself lengthy, with prolonged back and forth with clients, but it slows down other processes as employees are unable to focus their attention on their most important tasks.
How CLM can help
Contract lifecycle management is more than finding a program that simply generates documents. A good CLM solution’s purpose is to automate and streamline each and every step of a contract’s lifecycle. That means everything from generating the contract to negotiating the terms, enabling approvals and renewals, and keeping track of deadlines and compliance milestones. According to Conga, organizations that adopt a CLM experience
– 60 percent faster contract cycles,
– 50 percent improvement in negotiation speed,
– 40 percent lower contract administration costs,
– 11 percent improvement in delivery time, and
– 10–30 percent savings in operating costs.
Not only does a CLM tool make the process easier to manage, but it also minimizes the risk involved. For example, remember that 12–15 percent of all contracts are lost through leveraging manual processes—such as email and paper files—and from a lack of a single, central location where contracts can be easily stored, accessed, and searched for. Automating the process removes the possibility of human error, ensuring all documents are safeguarded and can be found when needed.
For a case study, look no further than General Electric. When GE hired Ashley Bolender as channel contracts leader in shared services, she found her new team was bogged down administrative tasks. More specifically, they were manually drafting high-volume, low-value contracts “using a Microsoft Word® template, [negotiating] those contracts via email, and [securing] executed copies via FedEx®.” Not only was the process a drain on their time, but it was also a waste of the talents they had been hired for.
In response, Bolender enlisted the help of Conga Collaborate. The platform provided “Unified Document Workflows, contract automation, a searchable repository, and contract lifecycle management.” Since its adoption of Conga, GE’s Global Operations team has used Collaborate to execute 1,000 contracts, saving about an hour and 20 minutes of draft time on every contract, which translates to reducing overall cycle time by 70 percent. Further, customers have responded favorably to the digital and mobile contracting experience, with surveys showing a 95 percent positive response rate.
Like any business, a manufacturer needs contracts to run smoothly, delivering excellent care to customers and profit for employees and managers. With regulations increasing and the supply chain needing supervision, a CLM is the best way to ensure success.