Contract Technology for Vendor Risk Management

The way procurement teams tackle vendor risk management and future-proof their supply chains has undoubtedly evolved. Supply chain risk management is becoming a top priority in procurement, as organizations struggle with supply chain disruption, volatility in costs and non-compliance fines–all of which can cause damage to reputation.

Procurement professionals need more visibility into contracts to proactively manage risk, and traditional contract and risk management programs have been unable to assess risk in real-time. Analyzing large volumes of contracts manually can be extremely time consuming and leave substantial room for error. By the time contract data has been analyzed manually, the data might be stale and most advantages drawn from analysis are irrelevant.

Recent insights from analysts highlight the need for many organizations to improve their vendor risk management:

• An analysis conducted by the SANS Institute found that up to 80% of data breaches originate in the supply chain

• According to PWC’s Digital Trust Insights survey, on average, companies allow 89 vendors to access their networks weekly

• A Bomgar Vendor Vulnerability survey highlighted that only 35% of vendor management policies are frequently reviewed to ensure compliance

Risk management should be an integrated part of the procure-to-pay process, including:

• Risk-scoring incoming vendor contracts

• Keeping a clause library of pre-approved terms and including them in vendor contracts

• Maintaining a complete audit trail and visibility on status of contracts    

• Centralizing the storage of contracts for visibility and transparency

Contract management technology for vendor risk management

Procurement teams have started to adopt technologies for vendor risk management, like the use of electronic signatures in vendor contracting and contract analytics.

• Electronic signature: Docusign eSignature enables procurement teams to execute revised agreements quickly and efficiently with a complete audit trail for compliance needs. eSignature also includes conditional routing to automatically send documents to the relevant stakeholders for review and approval.

• Contract analytics: Docusign Analyzer helps organizations negotiate better agreements by automatically identifying high-risk terms and clauses, and generating interactive risk scorecards based on your company’s legal and business policies. 

• Bulk Send: Safety National has been using Docusign’s bulk send feature to send their annual vendor risk assessment questionnaire and maintain a full audit trail for every interaction the company has with third-party vendors. This helps them maintain compliance with different regulations, like the California Consumer Privacy Act and NYDFS Cybersecurity Regulation.

• Clickwrap agreements: Procurement teams can use Docusign Click to capture consent to standard agreements such as an NDA, data processing agreement and supplier code of conduct.

Learn more about how Building a Modern Agreement Workflow for Procurement can bolster your procurement team’s vendor contracting process.