How do you improve vendor management with an AI-powered contract lifecycle management platform? This blog takes a deep-dive into how the retail space manages contracts across functions, the challenges in contract management, and why contract automation is the need of the hour to improve vendor relationships.
Globally, the retail industry has seen a tough couple of years. To start with, offline and online retail margins face pressure due to the pandemic’s aftereffects. A persistent inflationary climate further tightens revenue pressures. Deloitte’s research indicates that just one-third of retail industry leaders feel confident about retaining or improving profit margins in existing market conditions.
Evolving customer preferences make it harder for retail businesses to stay relevant. Agile, integrated, and data-driven operating models are the need of the hour in retail.
Strong relationships, operational insights, and real-time decision-making drive retail businesses. This is where contracts streamline the retail player’s synergies with vendors, partners, employees, and customers. Tightening regulatory requirements also call for contract management efficiency.
Retail businesses require contract management in:
1. Commercial operations
2. Real estate management
3. Procurement processes
Contract data, insights, and visibility allow retail businesses to adapt to market demands. For example, demand fluctuations might call for mid-term supplier contract amendments or rebalancing of warehouse portfolios.
Legal and contract management teams in Retail manage thousands of active contracts at any point. Valuable information captured by contracts is often lost, and spread across disparate agreements. Business risk increases, even as legal efficiency drops. In this context, technology-driven Contract Lifecycle Management (CLM) is essential in Retail.
Traditional CLM technology cannot address the new-age retail segment’s demands. These tools create legal bottlenecks—from inefficient authoring and version controls to the lack of a single source of truth.
Insufficient visibility of contract data due to multiple stakeholders is the biggest challenge in Retail at present. Long contract authoring turnarounds (and delays) is an example of how expensive these can be. Mid-stream contract amendments to facilitate customer preferences or supply chain changes are another example. Legal teams often spend considerable time and effort searching for relevant contract data in such cases.
Lack of collaboration capabilities and real-time insights leads to underperforming contractual outcomes. These issues also affect new contract negotiations and conflict resolution.
Other contractual challenges faced in commercial operations, real estate management, and procurement teams in retail include:
• Outlays, customer preferences, or competition create vendor management problems
• SKU pricing fluctuations due to multiple channels, promotions, and margin requirements
• Inflation-related management of procurement costs
• Different regulatory compliance mandates across locations due to global operations
• Lack of real estate portfolio overview dashboards
• Property acquisitions, rebalancing, and disposals
• Lease administration and property utilization
• Optimizing facility management costs
• Business risk mitigation
• Sustainable procurement mandates
As omnichannel Retail and Marketplaces become common, issues like lack of CLM software or offline CLM systems create an all-new challenge. Emerging trends like Direct-To-Consumer business models call for ongoing innovations in this space.
First-generation CLM tools specialized only in one aspect—just on the buy-side or sell-side. Omni-channel retail and newer market opportunities require end-to-end management of contract lifecycles across channels.
Intelligent CLM leverages developments in Artificial Intelligence (AI) and Natural Language Processing (NLP). Its powerful features like instant contract data access and real-time insights make these solutions ideal for Retail use cases.
Retail businesses can leverage Intelligent CLM tools for benefits like:
• Consolidation and access to every contract value in your portfolio
• Automatic digitization of historical contracts
• Bird’s eye view of Commercial, Real Estate, and Procurement contract data
• Reduction in contract authoring turnarounds by up to 40%
• Frees up legal teams for higher-value assignments
• Increases collaboration with all stakeholders
• Timely approval and payment workflows
• Simpler contracts, easier mid-term amendments
• Decrease in spending of up to 12%
• Risk reduction across the contract cycle
• Better contract compliance within the business
• Customized Retail process specific CLM tools
• Faster CLM solution go-lives
Earlier, CLM tools in retail faced post-signature obligation management issues due to lack of data sharing. Intelligent CLM software combats these issues via AI-based tracking of contractual commitments.
Collaboration using chats and centralized communication threads streamlines data sharing. Made-to-measure user dashboards ensure faster decision-making. Automatic escalation of non-compliance ensures ideal outcomes.
Intelligent CLM solutions ease mid-term amendments. Leading retail businesses use such capabilities to meet changing market conditions. Features like alerts for upcoming renewals prevent losses and penalties.
CLM software has come a long way since its initial contract automation days. With a strong Legal Tech component, Intelligent CLM solutions enable the omnichannel retail revolution.
Next-generation Retail models call for agile contract management processes, metrics, tools, and risk management. Dynamic use of suitable technology will accelerate decision-making and fulfillment of obligations.
Ongoing optimization of contract management workflows is equally important on this front. Intelligent CLM software like SimpliContract achieves these objectives using:
Choosing the right intelligent CLM solution is just the beginning. Optimal CLM rollouts require a partner with end-to-end implementation experience. The CLM vendor must be able to enable solution adoption among your business users and other key stakeholders.
For instance, you can prepare for your retail CLM implementation with a consultation session from SimpliContract. Our team consists of lawyers, technical experts, and contract management consultants who can assist your organization on the CLM journey. This is backed by SimpliContract’s 24x7 support.
To sum up, legal transformation has become an essential hygiene factor in modern businesses. Contracting process optimization is a great way to start off your retail business’ legal transformation objectives. When backed by Intelligent CLM, this project paves the way for nimble, agile, omnichannel business models that withstand market turmoil.
Contact us today to learn more about Intelligent CLM’s transformation potential in the retail industry.