Use of Flowcharts in Contract Process

by | Jun 4, 2019 | Customer Service | 0 comments

“The first principle of contract negotiations is don’t remind them of what you did in the past – tell them what you’re going to do in the future”- Stan Musial

The modern business contract and its attendant legalese, terms, and conditions represent a central aspect of any commercial relationship. Firms and enterprises typically enter a contract as part of key business strategies designed to achieve certain commercial objectives. Typically, contractual parties invest significantly in terms of time and resources as part of efforts to conclude contracts that favor them. However, the concept of contracts is not new. During the Industrial Revolution, the spirit and letter of English law invested heavy promise in the concept of ‘freedom of contract‘. According to modern comment, this action signified a sign of progress that destroyed the vestiges of feudal and mercantile restrictions hitherto imposed on workers and businesses. In recent times, the contract process is defined as “the interaction between the vendor and the purchaser that ensures that both parties meet their respective obligations in any procurement relationship. The aim is to meet the operational, functional and business objectives required by the contract and provide a profitable interaction.

Vigilance is critical to ensure the success of the contract process as defined by a formal business document. In line with this, business operators can use flowchart diagrams to define actions that will monitor and oversee the implementation of contractual obligations. Such an illustration can also contain stages that outline definitive actions that arise in response to missed deadlines, sub-par work performance, and a (perceived) failure to meet assorted contractual obligations. Hence, a business partner may elect to etch a quantum of financial costs (and other forms of penalty) inside the said flowchart. The illustration may also outline a list of compensatory actions required to be undertaken by the other party in the event of lapses in contractual performance. Hence, flowcharts can help reinforce certain elements of the contract process for the benefit of modern commerce.

Managing the lifecycle of a contract process remains vital to its success. Business operators can deploy the flowchart diagram to complete this task at graded intervals that span the life of a certain contract. The various stages of such a flowchart may include reviewing the terms of a contract, flagging points of contention therein, monitoring the execution of various stages of said contract, managing contractual records, performing regular audits on service delivery, etc. In essence, the flowchart emerges as a snapshot of the contract process at any given point in time. It offers a tangible means to reviewers tasked with evaluating the performance of a contract. Further to this, the illustration may present a circular or linear image that outlines the mentioned activities. In doing so, the flowchart diagram also serves as a document that will preserve the various parameters of contractual performance for the benefit of reviewers in the future.

Conflicts may arise in the execution of a contract process over an extended period between two commercial parties. This is natural, given the different levels of perception that may animate views from either side. Therefore, conflict resolution emerges as a critical set of actions that must be blueprinted through flowchart diagrams. Such an illustration may demonstrate the mechanisms (and their integral elements) that will help resolve issues, exceptions, and problems inside an appropriate timeframe. This flowchart may present an exceptional appearance by depicting multiple conflict resolution systems positioned at different levels of the illustration. The diagram also displays an abbreviated view of the contract process in terms of the native scope of resolving disputes or the proverbial bones of contention. Multiple actors may perform key roles in ensuring successful resolution, and these must be appended to appropriate stages inside the flowchart diagram.

Issues related to poor performance on the part of contractual vendors require appropriate investigations in the interests of enforcing the letter and spirit of a business contract. Business operators may elect to deploy flowcharts to log such issues, construct performance timelines, and initiate appropriate actions as part of the enforcing the contract process. Such a flowchart diagram may depict a series of remedial actions contained in various stages of said diagram. These stages can feed into the final evaluation of the performance of a particular vendor, and cast an effect on the renewal of the contract process with said vendor. In addition, the flowchart may include a list of financial penalties, recommended training and re-training procedures, and (or) a termination of the supplier relationship owing to issues such as poor performance. In essence, said flowchart diagram empowers contractual partners to add heft to performance appraisal mechanisms, thereby furthering the cause of modern commerce.

Key Performance Indicators (KPIs) represent a vital metric that indicate performance levels in modern business contracts. This metric allows a business to measure a vendor’s performance in line with expectations. This part of the contract process, when etched on a flowchart diagram, can trigger the emergence of an expansive illustration that indicates the health of a contract (and justifications) for the renewal of the same. We may view such a flowchart as a tool that enables performance reviews of a vendor’s performance. The various stages inside this flowchart may include discrete KPIs and the addition of a sequence of numbers that promote a numerical quantification of the final appraisal. Business operators may add a series of new KPIs to the flowchart to denote additional KPIs that distinguish the evolution of the operational aspects of the contract process.

Modern risk management strategies fully impinge on the operational tactics that guide the creation of a contract process in contemporary times. A certain commercial operator may envisage flowchart diagrams to evaluate (or assess) the impact of external risks in the fulfilment of a contract. In line with this, such a diagram may portray the varied nature of risks in the form of political unrest in risky geographies, economic uncertainty, gyrating foreign exchange rates, a history of violence in volatile areas, the possibility of natural disasters, labor upheavals, a supplier’s inability to cope with these risks, etc. Hence, the illustration sketches the various lines of risk for the benefit of business planners who must frame the contract process in light of these factors. Intelligent business operators may erect parallel lines inside the flowchart to denote risk mitigation strategies that arrest the impact of these factors on the contract process. In time, the flowchart may emerge as a template that helps fashion business contracts in high-risk operating environments.

The analysis places the spotlight on the varied uses of the flowchart diagram in defining and executing a contract process. These points of analysis also serve as a roadmap that can guide business partners to achieve a semblance of equity in the process of forging a modern contract. We note the use of inter-connected illustrations allows potential contractual partners to engage in negotiations, assess the varied motivations of the other party, and accommodate the various requirements of relevant parties inside the contract document. In addition, the flowchart allows both sides to undertake cogent actions designed to find common ground that promotes the interests of both parties. The flowcharts may also include provisions for automatic contract renewals in situations wherein contracted parties have met the defined thresholds of performance. These factors allow the flowchart diagram to emerge as a precursor to smooth commercial collaboration, while leading the way to enhanced partnerships in the future.

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