The Evolving role of a Contract Manager

With the changing business landscape the role of contracts in the organization is changing. As per an Aberdeen Study, large enterprises (those with $2.5bn or more in top line revenue) averaged having around 13, 000 procurement contracts in use. That’s a lot of contracts.

Evolving role of a Contract Manager

Furthermore, the rules and regulations are getting stringent; companies are dealing with multiple suppliers from across the globe, margins are dwindling and competition getting fierce. Automation has entered the contract management arena in a big way as it’s difficult to keep a tab on thousands of contracts in multiple languages through manual ways.

All this goes to show that importance of contracts in a company is increasing and it would definitely demand a new approach from the contract managers.

IACCM rightly observed in its recent article, “A result of this is the steady emergence of two types of contract or commercial manager. A majority still performs a role that has changed little from that set out in the original blog, though it is important to note that the required knowledge, measurements and skills required to perform that role have evolved at a rapid pace (I will write more on this is a future blog).

The second contract management role is far more strategic and is about business enablement rather than tactical operations. In this role, the contract manager is both an adviser to executives and a vehicle for implementing organizational goals. Essentially, the strategic contract manager ensures that contracts and contracting procedures are used to execute business strategies — for example, with regard to desired levels of risk, or through the creation of market competitive commitment capabilities, or via more relational or collaborative forms of agreement with trading partners. But this strategic role also informs management about trends or issues that are observed as a result of more thorough analysis of the contracts and their performance. For example,

• What are the types and severity of different risks and where are they occurring?
• What are the market trends with regard to the sort of commitments expected by customers or resisted by suppliers?
• How can the business overall be empowered to exercise better commercial judgment and to reduce regulatory, reputational or margin risks?”

The role of a contract manager has evolved to a more strategic one that is expected to bring more value to the table, beyond the routine, tactical tasks.