Have you ever wondered how procurement can have a make-or-break impact on an organization? Procurement and its management of a contract are extremely important components that ensure business operations run orderly and in a maintained manner, hence making sure their relationships with supply agents remain good. By gaining an understanding of these concepts, professionals will learn the ways to save costs by improving efficiency, hence, driving business success. In this regard, if you want to engage yourself in taking your expertise to the next level, this Procurement Short Course is an ideal starting point.
Difference Between Procurement And Contract Management?
While the two concepts of procurement and contract management are interlinked, they deal with different aspects in the purchase of goods and services. Procurement covers the overall process of acquiring goods by identifying needs, sourcing suppliers, negotiating prices, and managing transactions.
On the other hand, contract management manages the contracts that result from procurement activities. It ensures that terms are in accordance with the relationships with suppliers throughout the contract lifecycle. Both processes provide an organization with skill and control in today’s competitive marketplace.
The Procurement Process
The procurement process is a series of steps designed to enable organizations to acquire the goods and services needed with efficiency. Below mentioned are the stages involved:
Needs Assessment: The very first step in procurement is analyzing organizational needs to identify what should be procured in the form of a product or service. The quantity, quality, and timeline are other factors that are looked into during the assessment.
Supplier Selection: Once needs are established, the next step is to identify and evaluate potential suppliers. This involves requesting proposals, reviewing supplier credentials, and comparing prices. Selecting the right supplier is critical, as it can impact quality, reliability, and pricing in the long run.
Issuance of Purchase Order: The issuance of a purchase order is done to narrow down the agreement with the selected supplier through a statement of purchase terms, price, date of delivery, and conditions of payment. A clear purchase order will avoid misunderstandings and set expectations among parties.
Delivery and Payment: Finally, the delivery of goods or services occurs, and, payment is processed. Timely delivery for operations is essential and it promotes good supplier relations. The whole process of procurement requires transparency for people to have confidence in it.
The Contract Management Lifecycle
Effective contract management is made up of several stages that ensure compliance, mitigate risks, and help build positive supplier relationships:
Contract Creation and Negotiation: This first stage involves drafting a contract and negotiations with the supplier. The idea is to get clarity from both parties and make a mutual agreement towards setting the right expectations to lower the possibility of disputes occurring in the near future.
Execution of Contract: Once the contract is finalized, both parties will have to execute it, making it legally binding. This includes the signing of documents and any keeping checks. Proper execution is critical because it shifts the agreement from theory into practice, binding both parties to their obligations.
Performance Monitoring: This involves tracking deliverables, and timelines, and keeping up with the terms. Performance reviews should be done periodically to recognize any potential issues early so that action will be taken to ensure that set standards are met.
Renewal or Termination: When contracts are at expiration, organizations have to make a decision whether to renew or terminate agreements. This stage should involve a careful review of supplier performance, combined with market conditions.
Explore UniAthena’s Procurement and Contract Management Training Course
This Procurement Short Course provides learners with an overview of the core principles that form effective contract management upon which solid customer, vendor, and partner relationships are laid. You will learn about procurement’s critical role in driving profitability for the organization, while also gaining insights into how to drive favorable negotiated terms and conditions.
You will further learn how to develop robust procurement strategies that add value while protecting your business interests. This one-week self-paced learning course provides the needed flexibility and will get you a chance to earn a certification from Cambridge International Qualifications, UK. Sign up now and take your first step in enhancing your career ahead with this Procurement and Contract Management Training Course.
