Contract repository We have seen various approaches to storing contracts. These range from contracts being stored in individual’s desk drawers, filing trays, lockers or even at home. Having a central location for storing contracts (whether physical and / or electronic) is crucial not only for keeping them secure, but also for ensuring that they are easily accessible to appropriate stakeholders (and hence more likely to be used proactively during the contract lifecycle).
The vast majority (87.2%) of the organisations we surveyed have a central repository for storing their third-party contracts, against 5.3% that do not.
Figure 23: DO YOU HAVE A CENTRAL REPOSITORY FOR STORING YOUR THIRD-PARTY CONTRACTS?
No Don’t know Yes
87.2%
7.4%
5.3%
0
10%
20% 30% 40% 50%
60%
70%
80%
90%
To deliver value, contract repositories need to be well organised, easily accessible and secure (e.g. locked and governed by check-out, check-in processes). Ideally, contracts are kept in a password-protected online system or searchable database. Ownership of contracts Just over half (55.8%) of survey respondents said the procurement and supply chain function is responsible for managing supplier contracts, with the legal function a distant second on 15.8%. Meanwhile, one in 10 indicated that ownership of contracts is not well defined within their organisations.
Figure 24: WHO OWNS AND / OR IS RESPONSIBLE FOR MANAGING THIRD-PARTY CONTRACTS IN YOUR ORGANISATION?
Procurement and Supply Chain Legal
55.8%
15.8%
Not well defined Business (users of products and services) Joint ownership between functions Finance Other
10.5%
7.4%
4.2%
3.2%
3.2%
0
10%
20%
30%
40%
50%
60%
There is no right and wrong approach to the ownership of contracts. This mainly depends on the organisational structure, internal policies and the size and the scope of activities managed by the legal department. The key point is that procurement, if not the owner of third-party contracts, and the business users should be consulted during the contract drafting phase in order to ensure that the agreed terms and conditions are in line with the nature and strategy of the purchased products and services. Procurement should avoid being in a position where the legal department produces the third-party contracts on their own and then hand them over to procurement or the business to manage throughout their lifetime. Contract drafting has to be a joint effort in order to meet the requirements of all parties.
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