Manufacturers contract with third parties in every major function within an organization and are executing hundreds, if not thousands, of agreements every year. Between master service agreements (MSAs), statement of works (SOWs), non-disclosure agreements (NDAs), commercial and government contracts, there can be many different agreements to create, execute, and manage which follow different formats, lifecycles and approval workflows. Contracting and legal teams are often weighed down by high volumes and manual, time-consuming tasks associated with the paper contracting process.
Drafting a contract and receiving a signature may seem simple, but imagine the long process of editing, internal approvals, review and redline, signature and contract storage, only to have multiple amendments and extensions to handle down the line. Often, this leaves an email inbox flooded, multiple versions circulating on shared file directories and passed between internal and external contacts, and a large customer portfolio to handle.
An increasing number of life science organizations have implemented Contract Lifecycle Management (CLM) tools to add automation, eliminate bottlenecks, and simplify tasks to shorten every stage of the contract lifecycle. These tools mirror the traditional contracting process in a highly streamlined manner and have shown great improvement in the contracting process.
CLM tools can assist with the following:
- Document repository
From a broad view, a CLM tool serves as a central document repository. Organizations find value in having a central location for all contract documents and related information from the initial agreement to all consecutive agreements in one central location. This eliminates the need to search for agreements in multiple locations and losing key contract documents.
- Process standardization
A CLM tool offers much more value than simply functioning as a document library. Contracting and legal teams will find that when a CLM tool is fully implemented, it defines a contract lifecycle for each contract type and ensures users are following a standardized process that is defined by the organization.
Templates and clauses are easily designed within a CLM tool to ensure contracting teams are authoring legal documents in a standardized, pre-approved manner. Tools may integrate with Microsoft Word allowing for seamless use of a selected template and uploads of active drafts back into the system. The document is sent through internal approval routes in the tool, eliminating email correspondence for internal approval. The lifecycle of a contract is the visual center point of a CLM user interface. This clear, colorful timeline gives visibility to the current state of the contract to all users within given security permissions allowing an easy way to check the current status of a document.
From an audit perspective, a CLM tool provides an ideal trail of detail with increased visibility and accessibility within an organization. When user access and security must be restricted, the CLM tool is easily configured to meet business needs. Templates and clauses that are designed and approved by the business are used to initiate contract creation and all changes are documented with timestamps and user names.
A CLM tool also integrates the redlining process to remove the challenges of tracking multiple versions of documents on a shared file directory or a desktop folder location. External email exchanges for review and updating can be initiated in most CLM tools, leaving another clear trail of movement between individuals and document versions. Once a final version is agreed upon, e-signature is easily requested and received back via e-signature (i.e., DocuSign) integration. These features come as a convenience when contract amendments and extensions occur.
- Search and reporting
Arguably one of biggest benefits of implementing a CLM tool is the search and reporting capabilities it provides. Each document within the tool is tagged with metadata to allow for searching and auditable reporting across a detailed contract library. Several tools on the market provide optical character recognition (OCR), which allows users to search for a keyword bringing up any contract documents including PDFs with this keyword. With key data points captured in the metadata of each authored document, users can easily export key contract information and easily pull all contracts and amendments for a customer account for example. Lastly, as the tool measures the amount of time spent in different lifecycle stages, key performance indicators (KPI) can be determined and reported on to help address bottlenecks.
Contracting teams create, execute, and manage a high volume of authored documents on an ongoing basis. Though this traditionally includes a number of manual time-consuming tasks, introduction of a CLM tool provides significant improvement to the contracting process. The tools are easily configurable to meet business needs and implementation is often successful without the need for system customizations. The traditional contract process is mirrored by the tool, but with added automation and streamlined movements to reduce the burden on contracting teams. With an efficient contract lifecycle, life science organizations may see accelerated sales cycles, decreased risk of contractual compliance issues, and additional focus to place on customer responses.