Originally appeared on Consumer Goods Technology, June 10, 2021
The development and manufacturing of any given product has numerous suppliers and contracts associated with it. Supplier contracts for labor, equipment, materials, logistics and many other categories have complex and variable contractual elements. Labor agreements alone have many elements that make up “cost” – everything from statutory taxes to insurance to rising hourly fees. All variable components combined contribute to the cost of a product or service and can easily get out of hand.
It doesn’t have to be this way. A contract compliance audit can help consumer goods (CG) companies gain a clearer view into their contracts and how they are actually implemented. The goal is to proactively address root causes of contract issues by tightening contract language or changing processes to ensure they don’t continue, which leads to recoverable overcharges as well as future cost savings – and continued profit back to an organization’s pocket.