What is Procurement Contract Management?
Procurement contract management is the process of managing contracts related to Procurement and purchases made as a part of legal documentation of forging work relationships with customers, vendors, or even partners. It comprises negotiating the terms and conditions of contracts. Procurement contracts also include certifying compliance with the terms and conditions and documenting and agreeing on any changes by both parties.
Understanding The Procurement Contract Management Process
Procurement organizations control spending and support operations with the timely acquisition of quality goods and services. Improving this strategic function's efficacy leads to cost savings, risk minimization, and better purchasing strategies. However, Procurement and contracting teams often rely on manual processes, spreadsheets, and siloed systems, resulting in long lead times.
Organizations can be more strategic in their sourcing and negotiating by centralizing and automating procurement activities, such as purchasing and supplier communication.
Contract management is an integral part of any procurement cycle. Purchasing and Procurement firms may reduce vendor prices, execute contracts with new parties faster, boost compliance, mitigate risk, and effectively manage internal and external relationships by implementing contract lifecycle management software.
The procurement contract management process includes:
- Managing contracts as a part of legal documentation of forging work relationships with customers, vendors, or even partners.
- Negotiating the terms and conditions in contracts
- Certifying compliance with the terms and conditions
- Documenting and agreeing on any changes by both the parties
Challenges in Procurement
Procurement is a complicated aspect of global businesses that entails significant commercial and regulatory risk. Some of the contract challenges in procurement include:
- High cost of operations
- Slow turnaround time
- Loss of revenue due to unclaimed entitlements
- Missed Obligations
- Regulatory enforcement due to non-compliance
Objectives of Contract Management in Procurement
Contract management helps in the smooth running of transactions, maintaining good relationships with suppliers, reducing risks, and the speedy resolution of problems.
However, the main objectives of Contract Management in Procurement are:
- To ensure product/service is sold at an agreed-upon price.
- To assess whether product/service conforms to specified quality standards.
- To ensure product/service is delivered timely, at the right place, and correct quantity.
- To ensure that vendor management is cost-effective.
Importance of Contract Management in Procurement
The procurement team must have a solid Contract Management plan to ensure the mutual benefit of all relevant stakeholders. Here are some ways in which Contract Management improves Procurement:
- Enhances Business Functioning by identifying the needs, implementing the strategies, and analyzing the objectives.
- Controls Spending by providing better spend visibility and helping organizations to monitor financial transactions.
- Aids in Supplier Evaluation by ensuring that the suppliers abide by the criteria and build long-term relationships with them.
- Ensures compliance by mitigating risks to a great extent.
Manage Procurement Contracts on ServiceNow
Built as a native ServiceNow application, an AI-Enabled CLM Solution, Aavenir Contractflow can capitalize on existing ServiceNow investment and offers many benefits, including:
- Quick & easy installation from ServiceNow Store
- The extended capability of Aavenir Contractflow on Now Platform products like GRC, LSD, etc.
- Single sign-on support for Now Platform
- The upgrades installation and compliance management on the same NOW platform with the same admin skills
- Easy integration with CRM, ERP, Risk Management systems using integration hub
- Data storage on the world’s most secure and scalable Now platform