Contract Management Systems Foster Transparency and Efficiency

By Laurent Bersot, Director of Purchasing, Recaro Aircraft Seating And Wen-Long Luk, Contract Manager (Legal Department), Recaro Holding GmbH

Laurent Bersot, Director of Purchasing, Recaro Aircraft Seating

Since its inception nearly 100 years ago, players in the commercial aviation industry have been rolling with the punches. Today, the airline seat market has a certification process with dozens of elements to ensure products are safe and comfortable for passengers. Managing contracts requires the same amount of diligence. Each team works with a different supplier, customer, or contractor, and wires can easily get crossed if company contracts are stored in different spots or if the contract management program isn’t used to its fullest extent.

If 2020 taught us anything, one team cannot effectively do its job if the other teams are left in the dark on the details. Too many things shifting at such a rapid pace can result in higher risks and confusion, which pushes transparency and efficiency to the backburner. To address this situation, the Recaro Group rolled out its contract management system, which allowed employees across various departments to quickly optimize processes and align communication protocols.

From suppliers to customers and from sales to purchasing, there are a lot of moving parts when creating various types of contracts for an international aviation company

Transparency

Contract management systems can create a culture of transparency, both internally and externally. Working with customers, suppliers, and colleagues around the world comes with its own set of challenges, and transparency doesn’t come naturally. A robust contract management program, in tandem with consistent communication, is a simple way to foster transparency.

When used properly, contract management systems help align priorities andsimplify risk management. Tracing the history of the contract allows the manager to see how the contracts have changed over time. This type of data is indispensable during contract negotiations andhelpsto build trust.

A full-service database facilitates cleaner searches and allows individuals to see a big-picture perspective. Departments can easily become silos in large companies, and a strong system encourages seamless communication between teams.

Strategically using the contract management system also supports matters related to price maintenance, such as the terms of guarantees and grace periods. Parties can use this knowledge to communicate timelines and goals to customers or suppliers. Colleagues should regularly be gathering internal feedback on how to improve the effectiveness of the contracts related to their department.

Efficiency

Efficiency should also be at the top of the list when implementing a contract management system. Standardized workflows ensure the contracts are reviewed and approved in a timely manner before being passed along to the next party for closure. Taking advantage of uniform contract conditions reduces the risk of compliance-related errors. In addition, to avoid starting from the bottom each time, using templates will boost efficiency.

Another big priority is the capability to take actionable insights from the contracts. Visibility and key performance indicators ensure agile decisions will be made, and all parties can push for better business worth. Strong reporting capabilities are also important, as measurable objectives lead to more opportunities for optimization.

For example, our sales team pulls reports that provide an overview on the status of contracts from different airlines, so they know how to better manage their timeline and minimize risk. Maintain internal notifications and create tasks within the program to better anticipate future challenges and enhance the coordination between teams in the renewing process.

From suppliers to customers and from sales to purchasing, there are a lot of moving parts when creating various types of contracts for an international aviation company. Although programs can seem overwhelming at first, learning how to use every feature offered by the contract management system can make companies more capable in the long run and will help improve communication.

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