Contract Compliance Rate measures how closely actual purchases or activities follow the terms and conditions agreed upon in supplier contracts.

What it Measures ?

How many contracts are followed correctly out of total contracts.

Relevant StakeHolders 

Legal Teams, Contract Managers

In-depth Use Case / Real-world Example

Imagine a manufacturing company that produces automotive parts. It signs contracts with various suppliers to buy raw materials—like steel, rubber, or plastic—at agreed prices, quantities, and delivery schedules. Now, let’s say the company agreed to buy 100 tons of steel annually from a supplier at ₹50,000 per ton. But over the year, some departments bypass the contract and purchase steel from other suppliers at higher prices or different terms. This mismatch leads to higher costs, inventory issues, and even compliance risks. Contract Compliance Rate helps track whether such purchases are happening as per the agreed contracts. If the company ends up buying only 70 out of 100 tons from the contracted supplier, the compliance rate is 70%. This metric is important because: It ensures the company gets the best-negotiated prices. It builds trust and stronger relationships with suppliers. It avoids legal and financial risks from contract violations. It keeps procurement and finance aligned with strategic goals. In tools like INSIA, this rate can be automatically calculated by comparing actual purchase orders with contract terms. Improving this rate means training teams, using approval workflows, and flagging non-compliant purchases early.