Contract Process Workflow

Description

This diagram represents a full lifecycle of a purchasing contract within a company: from initial agreement on terms to final reconciliation and closure.

Problem

The main issue was the presence of “blind spots” where different departments interpreted process stages differently.

This led to questions such as:

• What needs to be completed before contract approval by the General Manager?
• Who is responsible for document collection?
• At which stage is the contract currently?
• When is a contract considered closed?

Solution

1 - Map the full contract lifecycle within the company .
Understand how the process actually works in practice in order to improve transparency between departments and clearly define responsibilities.

2 - Describe the process as a swimlane diagram, separating responsibilities between key stakeholders:

• General Manager
• Purchase Department
• Execution Department
• Legal Department
• Accounting Department

3 - Numbering process steps to make it easier to track the current status of each contract.

Result

• the process became visually clear and unified across all departments
• clear ownership and responsibilities were established
• contract status tracking became more transparent

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Process Description

The process starts when a new purchasing contract needs to be created.

1. Initiation and preliminary alignment (Purchase Department)
   A price limit is defined and initial terms are discussed with the supplier. Feasibility of the deal is also checked, including logistical constraints.

2. Supplier verification and deal preparation (Purchase + Legal)
   The supplier is reviewed, risks are assessed, and contract requirements and conditions are clarified.

3. Contract drafting (Execution + Legal)
   A draft contract is prepared and iteratively aligned between internal departments and the supplier. Adjustments are made if necessary.

4. Approval and signing (GM + Execution)
   The final version of the contract is approved by the General Manager and signed by both parties.

5. Contract execution (Execution + Accounting + Purchase)
   Depending on delivery terms (EXW or CTP), different workflows are triggered:
   EXW: 100% advance payment is initiated, transportation is arranged, and delivery is monitored
   CTP: payment is processed according to contract terms
   After that, goods are received and supporting documents are verified.

6. Contract closure (Execution + Accounting + Legal)
   After delivery confirmation, reconciliation is performed, closing documents are collected, and the contract is archived. In case of discrepancies or damages, a dispute resolution process is initiated.