How Operations Teams Can Take Ownership of Contract Management

Most supply chain leaders recognize that silos kill efficiency.

But while we've made progress connecting systems, data, and teams across logistics, procurement, and fulfillment, contracts remain stubbornly isolated.

That’s because contracts aren't legal documents; they're operational documents.

And a massive shift is happening right now in who owns them.

When contracts are trapped in legal departments or scattered across shared drives, the operational consequences are severe:

●      Missed renewal deadlines causing supply disruptions

●       Negotiated volume discounts that nobody tracks or enforces

●       Rogue purchasing outside of established supplier agreements

●       Critical contract terms nobody can find when problems arise

World Commerce & Contracting estimates that contract value leakage costs businesses up to 9% of annual turnover. For a $100 million company, that's $9 million walking out the door because nobody connected contract terms to operational reality.

Operations leaders are taking over

What's changing? Operations and procurement teams are taking ownership of the contract process.

Contracts used to "legal's problem." But today, most customers don't even have a legal team managing their contracts. It's operations and finance leaders driving contract transformation.

This isn't just happening at small companies. According to Proxima's Supply Chain Barometer, "96% of CEOs are set to spend the same (41%) or more (55%) time on supply chain-related topics" as they recognize contracts as critical operational assets.

Why this shift?

Breaking down silos with connected contracts

The companies seeing the most success are those treating contracts as the connective tissue between procurement, operations, and finance.

One manufacturing customer, for instance, reduced their parts costs by 11% simply by giving their procurement and operations teams visibility into all active supplier contracts. Before implementing contract lifecycle management, they had duplicate suppliers providing essentially identical parts at dramatically different price points.

Another logistics client discovered they were losing over $400,000 annually on fuel surcharges that violated their carrier contracts. Their operations team had the invoices, their legal team had the contracts, but nobody was connecting the dots until they brought contract management into their operational systems.

The most dramatic transformation happens when contracts become truly operational documents:

1. Renewal dates integrate with procurement planning. No more emergency purchases when agreements expire unexpectedly
2. Price terms connect to AP workflows. Invoice automation can verify pricing against contract terms
3. Service levels link to performance tracking. Operations can monitor and enforce promised deliverables
4. Contract data feeds supply risk assessment. Identify supplier concentration risks before they impact production

AI is accelerating the transformation

The technology driving this shift is advancing rapidly. According to research, AI implementation in contract management has grown from 30% to 42% of organizations in just the past year.

That's because AI can now handle tasks that previously required specialized legal expertise:

●       Extracting key terms from existing contracts

●       Identifying non-standard language in new agreements

●       Flagging renewal dates and compliance obligations

●       Spotting potential risks in supplier agreements

One particularly powerful application is in supply chain risk management. AI-enabled contract analytics can identify suppliers with problematic force majeure clauses, restrictive capacity commitments, or concerning geographic concentrations—all critical for maintaining supply chain resilience.

The technology is evolving so quickly that manual contract review will soon seem as outdated as fax machines. According to ProcurementTactics research, "AI forecasting can reduce warehousing costs by 5% to 10% and lower administrative costs by 25% to 40%."

Implementation strategies for operations leaders

So how do you make this transition from legal-dominated contracts to operationally integrated agreements? Based on our experience with thousands of companies, here's what works:

1. Start with one critical contract type

Don't try to revolutionize all your contracts at once. Pick a single category that directly impacts operations—like carrier agreements, raw material suppliers, or critical component vendors. Demonstrate the value of operational contract management in one area before expanding.

2. Create cross-functional contract teams

The best implementations bring together operations, procurement, and finance (with legal as an advisor, not a bottleneck). Each function needs access to contracts and plays a specific role in the contract lifecycle.

3. Connect contracts to operational workflows

The magic happens when contracts integrate with your existing systems. Link your procurement contract management system to your ERP. Connect renewal alerts to procurement planning cycles. Integrate pricing terms with accounts payable.

4. Establish shared KPIs

Give operations and procurement teams incentives to collaborate around contracts.

Measure contract compliance, savings capture rates, renewal efficiency, and risk mitigation together—not as separate departmental metrics.

Where supply chain contracts are heading

The future of contract management isn't about better legal documents. It's about operational documents that happen to have legal significance.

In five years,

●       AI will review 80% of standard supply agreements without human intervention

●       Operations leaders will manage contract workflows, not legal departments

●       Contract data will feed directly into supply chain planning and risk management systems

●       The line between "contract management" and "supplier management" will blur to irrelevance

The companies gaining a competitive edge today are those breaking down the artificial wall between contracts and operations. They're treating supplier agreements not as legal artifacts to be filed away, but as living operational tools that drive performance.

The question isn't whether your contracts will become operational assets. It's whether you'll lead the change or be forced to follow.