In the intricate dance of business operations, contracts serve as the backbone that ensures mutually beneficial relationships between parties. Once agreements are signed, monitoring their performance and overall health becomes paramount to sustaining successful partnerships and maximising outcomes. For commercial teams, this role is not just essential—it’s mission-critical. In this article, we delve into the top 4 best practices that commercial teams can adopt to effectively monitor the performance and health of existing contracts.
1. Clear KPI Establishment
Key Performance Indicators (KPIs) serve as the compass guiding your contractual relationships. Establishing crystal-clear KPIs right from the beginning sets the stage for comprehensive performance tracking. These KPIs should be aligned with the objectives of the contract, enabling you to gauge not only financial outcomes but also qualitative aspects that contribute to long-term success. Consider metrics such as on-time delivery, customer satisfaction levels, compliance rates, and cost-effectiveness. Regularly assess these KPIs to identify trends, anticipate potential issues, and make proactive adjustments when necessary.
2. Real-time Data Tracking and Analysis
Gone are the days of relying on static spreadsheets and manual tracking processes. Embrace technology that enables real-time data tracking and analysis. Contract management software solutions empower your team with dynamic insights, allowing you to monitor contract performance in real-time. These solutions provide instant visibility into contract compliance, milestones, and potential bottlenecks. By having your finger on the pulse of your contracts’ health, you can swiftly identify any deviations from the intended course and make timely, informed decisions.
3. Collaborative Communication
Effective communication is the glue that holds successful contract management together. Foster open lines of communication not only within your commercial team but also with other stakeholders, including legal, finance, and operations. Regular check-ins and status updates ensure that everyone remains aligned with the contract’s goals and that any emerging issues are addressed promptly. Encourage proactive discussions to address concerns and explore opportunities for optimisation. A collaborative approach not only safeguards contract performance but also strengthens relationships with partners.
4. Risk Mitigation and Contingency Plans
Risk is an inherent aspect of any business undertaking, and contracts are no exception. Identify potential risks associated with each contract and develop well-defined contingency plans. These plans should outline the steps to be taken if certain scenarios unfold, ensuring that your team is prepared to handle unexpected challenges. Regularly revisit and update these plans to reflect changing business landscapes and evolving risks. A proactive approach to risk management not only safeguards your contracts but also demonstrates your commitment to maintaining transparent and trustworthy partnerships.
Effective contract monitoring is an ongoing commitment that demands a proactive and strategic approach. By adhering to these top 4 best practices, commercial teams can ensure the sustained performance and health of their existing contracts. With clear KPIs, real-time data insights, collaborative communication, and robust risk mitigation strategies in place, your team is well-equipped to navigate the complexities of contract management and drive lasting success.
Brooklyn Digital Assessments: A speciality tool for monitoring performance
Here at Brooklyn, we have released our new Digital Assessments functionality that allows users to digitise and track passes or failures against metrics agreed between both the customer and supplier and activate service credits based on a service credit value underpinned by each record. Brooklyn’s Digital Assessments are fit for customer or supplier management at any scale, no matter the complexity. Read more about Digital Assessments or Request a demo.