Contracts like equipment need a cradle to grave approach

Contracts like equipment need a cradle to grave approach

Cradle to Grave does not only apply to equipment!   Contract Lifecycle management is just as important. The cradle to grave approach has long been a practice when acquiring expensive equipment.  The purpose was to manage and measure its end to end efficiency, cost over the life and on to disposal of the equipment.  That data then became a historical basis for designing and purchase replacement equipment. In some mature organizations, the concept was adopted for contracts.  Contracts are never a once and done process they to need to be managed from award to closeout.  Many SCM departments, especially those using P2P as the main procurement/ contracting function, focused, however, on simply recording what was ordered, paying what was required and using goods receipt to close it in the ERP/ financial management system. Don’t sacrifice the benefits of human intelligence when comes to contacts. What occurred between was forgotten at best or ignored at worst.  In some SCM departments, contracts are a simple clerical task where transactions like purchase orders are “papered” to formalize the agreement. While documenting the event is necessary, managing them is also a critical piece of the process.  So when comparing them to equipment the cradle to grave mentality would have each agreement assigned to an SCM contract manager whose oversee the associated activities. Not assigning them makes managing them difficult. To be sure the practice of using them to record financial transactions is necessary but if that is the only purpose then real cost management and vendor performance is impossible to track.

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