2024 sees manufacturing businesses grow by cutting back. In Make UK’s survey of manufacturing leaders, 48 per cent of those surveyed selected cost control as a 2024 business strategy for growth, with it overwhelmingly the top method for expansion. Inflation, and the rising costs of employment and energy, means most manufacturing leaders are planning to reach profit targets by reducing operational spend, rather than ambitious expansion programs or new product launches.
In the battle against unnecessary costs, contract management is a key tool in your arsenal. 71 per cent of companies cannot find at least ten per cent of their contracts – a debilitating barrier when it comes to ensuring suppliers are delivering their worth and avoiding contract leakage, where the value in production is far below contracted value. With poor contract management costing companies up to nine per cent of their revenue, leaders downplay the importance of this operational domain at their own risk.
Luckily, digital solutions have arrived in recent years that revolutionise the way we manage contracts, and as a result, the way we can identify opportunities for cost control in our supplier relationships.
Collate to control
The bedrock of efficient cost control is information—accurate, timely, and readily accessible. Yet, the sheer breadth of manufacturing contracts, which often range from a vast network of product suppliers to multiple distribution partners, can quickly transform this asset into a management nightmare.
This is where a smart software solution comes in. OneAdvanced’s Contract Management provides a single source of truth, by collating all your contracts in one central hub. Through a user-friendly interface, you can easily understand how much you are spending and who with. Integrated with Supplier Management, this will allow you to audit your suppliers – who is underperforming, who is overperforming, which are no longer needed – and make changes accordingly.
Built-in flexibility
A 2022 study found that 37 per cent of manufacturers were increasing the number of suppliers they worked with, to build in resilience against supply chain challenges caused by Brexit and geopolitical conflict. Expanding your supplier network to decrease disruption only makes business sense if you can also locate contracts quickly and add new ones in response to supply and demand.
Modern contract management software is designed to be your partner in agility. With all your suppliers collated and managed in one location, you can properly assess a wider supplier base in times of change. This means when orders surge unexpectedly or supply chains are disrupted, you're not held back by unorganised contracts; you're propelled forward by operational dexterity. You can choose to increase production with certain suppliers or decrease with others, pivoting in response to events, yet reassured you are fully informed.
With contract variation tracking, you can also add amendments during a contract as conditions change, retaining greater control and visibility. Refine operations in response to the unpredictable world of manufacturing, with peace of mind that the documentation stays watertight.
Contract management is a cornerstone of good financial management, and facilitates a cost control growth journey. Don’t shy away from investing in reliable Contract Management software. It’s the tool that will unlock not just savings, but a newfound agility and resilience.
Start a conversation with us here to see how OneAdvanced could help your team.
