Inefficient pre- and post-signature workflows can make supplier agreements a pain to manage. Can digitization change this?
We take a deep dive into supplier agreements and the benefits of digitizing the contract workflow. Use the navigation below to find out more.
Our general rule: supplier agreements focus on the selling of goods, vendor agreements on the selling of services. Not what you're looking for? Check out our deep dives on vendor agreements and SaaS agreements.
What’s a supplier agreement?
A supplier agreement sets out the terms of a relationship between the buyer and supplier. These contracts are also known as buy-side agreements. Whether your business is a marketplace buying produce, or a retailer buying clothes, the commitments between your business and the supplier are usually outlined in a supplier agreement.
Supplier agreements are similar to vendor agreements, but there are a few subtle differences. Vendor agreements tend to be more tech-focused whereas supplier agreements have a broader purpose. Suppliers, or counterparties, might also communicate more with the buyer in a typical contract of this type. Chances are, if there’s a positive relationship in place and the supplies purchased meet the buyer’s standards, both parties will agree to collaborate again in the future.
Who do supplier agreements affect?
Depending on the type of business and contract, supplier agreements might involve many different teams. The most common include:
The legal team. Legal are responsible for negotiations with the counterparty’s legal team. The contract process can be painful as it involves a lot of manual, low-value work, which only increases as the business grows.
The procurement team. This team is responsible for negotiating commercial terms in the contract.
The business stakeholder. This is the person or team directly using the supplies, and can be anyone in the business depending on what is being purchased.
Finance. The finance team, often led by the CFO, authorizes spend on the agreement and owns the payment process. Finance have to formally approve the contract and before it’s sent to the supplier. When companies don’t have an established finance team, this is often handled at an executive level.
Contract managers. They are responsible for managing the agreement after it’s been signed. If businesses don’t have contract managers, legal or procurement teams usually take ownership of post-signature management.
Legal or procurement are responsible for keeping track of renewal dates. This admin work is a huge time drain and keeps them from the tasks that matter
What’s the manual process?
The supplier generates an agreement from a Word template and sends it to the buyer. There usually isn’t a process for drafting this type of agreement – and negotiations depend on the power dynamics between the parties. If the supplier is a large, well-established business and the company buying the product is a scaleup, the supplier may not be willing to flex on terms.
When negotiations do take place, they often involve lengthy back-and-forth email chains between legal teams, with delays in running changes past approvers and waiting for their sign-off. Eventually parties come to an agreement and sign the contract, either using an eSignature tool or a lengthy manual printing-sign-scan-upload process. Everyone receives a signed copy for their records.
For the buyer, the real pain starts post-signature. Usually, the legal or procurement team are responsible for keeping track of renewal dates, which they do by manually inputting key details from the contract into a shared spreadsheet. This admin work is a huge time drain and keeps them from the tasks that matter. As the company scales, the volume of supplier agreements also increases, so legal or procurement can find themselves buried in low-value work.
To make matters worse, important information isn’t always clear, so finding the key details – like renewal dates – on third-party paper can involve a lot of digging. And if the business misses a deadline and the contract auto-renews, the business incurs a cost, creating friction between teams.
Why it’s painful to manage supplier agreements manually
Managing supplier agreements manually can be a painful experience that causes friction between teams. The most common pain points include:
No oversight: “People freestyle terms in the supplier agreements, which is risky for the business. There’s no unified workflow in place, so different teams are sending out agreements with minimal oversight from the legal team.”
Multiple systems: “Contracts exist in Word, and teams save them as PDFs, negotiate via emails and phone calls, before signing through an eSignature tool. There are several systems we need to jump between and it’s easy to lose track of versions.”
No central source of truth: “Signed contracts live in several places – either in a shared drive, on a personal desktop, or even printed and shoved into a filing cabinet. With no central source of truth, it takes ages to find contracts and get the information we need.”
Missed renewals: “Tracking key data is such a manual process; sometimes it can lead to missed renewal deadlines. When a contract auto-renews, the business ends up spending more than they need to, and legal gets the blame.”
It’s important for suppliers to make a good first impression, so make sure you’re sending out beautifully designed, engaging contracts with your dynamic, no-code editor
How to digitize your supplier agreements
A contract collaboration platform can help you digitize your supplier agreements and streamline the process, end-to-end. Usually, the workflow looks like this:
Collaborate: real-time negotiations
Speed up negotiations between you and the supplier – and keep an audit trail of changes – by collaborating in-real time in a contract collaboration platform. Commenting and editing in-browser can help you manage version control, with both parties notified via email or Slack whenever any changes are made. What’s more, approval workflows also make sure that legal have final sign-off on all contracts.
Agree: no more printing, signing and scanning
A contract collaboration platform with native eSignature makes it easier for parties to sign securely, anywhere, on any device. Once signed, the digitized supplier agreement is emailed automatically to everyone involved.
Manage: valuable contract analytics
A digitized supplier agreement will give you data insights so you can make your workflow more effective. The analytics dashboard will help you identify hold-ups, keep track of what’s changed since the previous round of revisions, and much more.
Legal and procurement can also set reminders ahead of important dates, giving teams enough time to prepare for commercial discussions and reducing the risk of unwelcome auto-renewals.
Experts break down every stage of the contract process in the ‘Modern contract handbook. Download it, free.
Digitize your supplier agreements with a contract collaboration platform that has the following features:
A dynamic, text editor. It’s important for suppliers to make a good first impression, so make sure you’re sending out beautifully designed, engaging contracts with your dynamic, no-code editor. Use images, charts and tables to simplify information and make your agreements more human.
Commenting. This feature can help teams to streamline negotiations and maintain an audit trail of changes.
Device-optimized eSignature. No more printing, signing and scanning – with a secure, native eSignature tool, parties can sign agreements easily anywhere, at any time, on any device.
Renewal reminders. Never miss a renewal deadline again. Assign reminders to individuals or teams to maintain accountability and reduce friction.
Searchable repository. With all your contracts in one place, and built from structured data, you can find exactly what you need without wasting time. Legal teams can run reports on supplier agreements and filter by renewal deadlines, so they’re always ahead of the curve.
Google Drive. Signed contracts are automatically downloaded and stored securely in the team’s shared drive.
Slack. Get Slack notifications whenever someone makes changes to the supplier agreement or when the contract has been signed, and give everyone visibility of the the process.
Email. Make sure your contract process doesn’t lose momentum; keep up-to-date with email notifications.
Excel. Export important contract data into a spreadsheet, so you can easily share information with the wider business.
Calendar integrations. Get notifications of upcoming deadlines in advance, so you can prepare for contract renewals.
Digitize supplier agreements with Juro
Is managing supplier agreements a pain point for your business? Is your contract process out of control, with multiple systems, limited oversight and a lack of version control? If so, try Juro for free and see how a contract collaboration platform can enable your business to agree and manage contracts in a unified workspace.