Contract Lifecycle Management (CLM) in procurement is a comprehensive approach to managing an organization's contracts throughout the entire lifecycle of that contract, from initiation through execution to expiration. It includes the process of creating, negotiating, signing, storing, referencing, and monitoring contracts with suppliers, partners, or other stakeholders.
CLM increasingly requires automated workflows, tech-enabled analytics, and physical and digital document management. One of the most important components of CLM is to make sure the business is in compliance with legal and regulatory requirements, and procurement has to provide real-time visibility into a contract's terms and performance.
When CLM is executed effectively, it can reduce risks and improve compliance for the business, but it also helps the internal stakeholders to extract more value from their contracts, identify areas for cost savings, and make data-driven decisions about suppliers, spend, or their categories. When CLM is supported with digital technology like automation and AI, which it increasingly is, procurement can also minimize errors associated with contracts and find new opportunities for value creation.
