Contract Management Reconciliation, Standardization, and Data Visibility Improvement
Transportation & Logistics Services

The client, an asset-light transportation and logistics services company with 60 billion (RMB) per annum revenue, which serves the High Tech Industry, also provides logistics services to the industry through its truck operation and customs declaration.

In addition to managing the transport of equipment, goods, and supplies, the company is responsible for complying with tax, duty and compliance standards and practices throughout the process. At the time of the engagement, the company represented more than 20,000 client contract in paper form and an-offline process to proceed the reconciliation.

Numerous agreements and contracts that include multiple schedules and addendums facilitated all company operations. The client, facing billing and settlement issues along with other financial and operational challenges, needed to reconcile its contract portfolio, standardize the language, provisions, and terms used in its contract documents, and ensure the right people had access to appropriate contract data to support a variety of business actions and activities. 

1. Gathering the operative set of customer agreements, schedule changes agreements, and individual company level commercial terms for each company;

2. Identifying any overlaps and understanding how each agreement affected billing, settlements, and operational processes;

3. Determining any non-standard language within all types of agreements, specifically to identify inconsistencies in pricing and settlement methodology;

4. Verifying contract compliance and performance requirements and resolve any related issues; Improving visibility into information contained in contract documents to improve operational efficiency and insight. 

OUR SOLUTION

MERCURY's contract management experts worked closely with the client team to take a holistic view of the existing contract environment.

1. Gathered contract documents and housed them in a single repository, improving accessibility and enabling teams to identify the operative, executed versions of contracts;

2. Reviewed the contracts to pinpoint any overlapping agreements associated with the four legacy companies;

3. Identified contracts with non-standard pricing and settlement provisions and worked with the general counsel and operations managers to standardize the provisions and renegotiate as appropriate;

4. Rewrote the company’s contract management operating procedures, giving the client a blueprint for standard pricing and settlement mechanisms and discounting processes that provided consistent guidance to the combined organisation; 

5. Integrated contract pricing, settlement data, and expiration dates into the company’s transportation management platform and designed a system of triggers to improve operational control

OUR IMPACT

1. Highly accessible contract library: Assembling and organising documents in one place enabled the client to improve accessibility to all contracts, streamline access to the operative documents, and identify any overlapping agreements to facilitate the integration of the four acquired companies.

2. Visibility and insight into key contract provisions: Making contract data available within the company’s management system gave client team members the visibility into information they needed, such as pricing, settlement mechanisms, and expiration dates, to greatly improve billing and settlement accuracy.

3. Links to contract documents also enabled the company to improve enforcement of contracts, meet performance and regulatory compliance requirements, and better understand and manage any liabilities and risks. Significantly enhanced operational control: Rapid insight into important contract data drives better operational response and decision making. For example, triggers built into the platform helped the company improve operational control, such as requiring contracts to be in good standing before agreeing to accept it from commercial signoff.

4. A contract playbook designed for consistency and efficiency: Crafting comprehensive contract management policies, including a standardized pricing and discounting structure and an interactive change management strategy, allowed the company to establish disciplined contract management processes that were used consistently across the combined entity to foster efficiency and compliance.

Contract Management Reconciliation, Standardization, and Data Visibility Improvement
James Wong
21 July, 2020
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