Contract compliance
Sourcing and Procurement
Definition
Contract compliance is the discipline of ensuring that every transaction with a supplier matches the prices, terms and conditions that were negotiated in the contract. Effective contract compliance is enforced at the point of purchase, not retrospectively in an audit.
Why it matters
Contract compliance gaps are one of the most common and most expensive forms of supply chain leakage. The traditional pattern is to discover variances months after the fact through manual reconciliation, by which time the spend has already happened. Enforcing contract terms at the point of purchase changes the economics of supplier relationships and produces a cleaner audit trail.
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