Contracts govern supply chain relationships, workflow, profit and a company’s ability to enact change.

But historically, contracts haven’t been a focus of operational efficiency or performance. They’re often an afterthought, rather than the foundation of commerce.

This attitude has led to a litany of challenges so common that many consumer packaged goods (CPG) producers consider them inevitable: disjointed negotiation processes (with redlines going back and forth by e-mail), slow approvals delaying deals, lost revenue due to contract underperformance and missed entitlements, and problems such as rebate double-dipping. Instead of enabling success, contracts become barriers.

Such problems are far from inevitable. They can be quickly resolved as companies digitally transform their contracting processes. More organizations are racing toward digitization to better adapt to supply chain disruptions and ever-changing markets, where agility is the new normal. Transitioning to digital contract management allows them to structure and connect the critical data in their contracts, thereby gaining speed, improving performance and driving compliance.

In addition, contract lifecycle management (CLM) technology has now matured to the point that the industry is seeing specialized applications built for the CPG and retail industry. Advanced CLM applications tailor functionality to the unique processes of that sector, including offering self-service in the field, incentives and rebates. CPG- and retail-focused CLM systems help companies stay out in front of market challenges and capitalize on opportunities through high-performing digital processes and on-demand data. Such advances can increase business performance by optimizing the pre-contract negotiation process so that sales can close deals faster, maximize profits, avoid revenue leakage, and track actual performance to contact terms.

In adopting CLM software, retail and CPG companies can achieve a return on investment in the form of:

Smoother negotiations. Pre-contract business, including information gathering, negotiations and due diligence are optimized to reduce default risk, customer onboarding friction and poor contract profitability terms.

Faster deal closure. Sales teams can onboard new customers quickly with templates and automated workflows, eliminating the need for finance and legal approvals on standard agreements, and streamlining the process for more complex deals.

Maximized contract performance. CLMs make it easy to aggregate and analyze contracts across the organization, integrating with key systems, including customer relationship management and enterprise resource planning, to increase agility, visibility, and velocity, and ensure that they benefit from all the clauses to which the business is entitled.

The challenges that CPG and retail companies face today are also significant opportunities. While supply chain disruptions, compliance demands and consumer volatility seem like obstacles, they’re reshaping successful companies in ways that harness and showcase their resilience, flexibility and creativity.

With tailored CLM, the opportunity exists for CPG producers and retailers not only to use technology to close deals faster and maximize profits, but also to provide deeper business insights, factoring in risks and opportunities. With the continued digital transformation and the application of AI-powered contract intelligence, CPG producers and retailers can increasingly look to the advanced analytics that CLM makes possible to give them unprecedented in-depth knowledge of their contracts.

Phil Barry is senior director of retail industry solutions with Icertis.