Effective procurement and contract management is highly important. But do you know how essential it is to business success?
Although it’s often overlooked, it is part of helping business owners to run their business successfully and profitably.
In this article, we will explain what exactly procurement and contract management is and why it is so important for the running of a successful business.
Table of Contents
Procurement refers to finding and choosing the right contractors for your company to work with. These contractors may be suppliers providing goods and equipment that a business needs to operate. Also, contractors providing services such as security, IT support, or marketing and advertising for the company.
Contract management explained
Contract management refers to the process of maintaining and managing contracts once the procurement process has been completed. It includes tasks such as:
- Ensuring that all legal documentation is up-to-date and correctly filled out and stored
- Negotiating the specific terms and conditions of contracts
- Documenting any potential changes in the contractual agreement
A contract manager will usually need to schedule and carry out regular audits of the company’s processes and current contracts.
What does a procurement and contract manager need?
Procurement and contract management are often combined into the singular job role of a procurement and contract manager. They need to be able to manage and execute all aspects of procuring and managing contracts within a company.
Because of this high level of responsibility, a company will first look to see if somebody has the right qualification. There are a number of degrees available from a number of institutions that allow you to achieve a Procurement and Contract Management Certificate Online.
The certificate is generally a mark of a good potential employee for a business to have! Alongside this, effective procurement and contract manager needs to possess a variety of skills. A procurement and contract manager will need to have the legal expertise required.
This is to ensure that all terms and conditions of a contract are fair and beneficial for both parties. Also, a procurement and contract manager will most likely need to have very good interpersonal and social skills.
Furthermore, a manager will be reaching out and negotiating with representatives from other companies. Bear in mind, they are also representing their own company to these potential contractors.
This usually requires a friendly, trustworthy, and sociable demeanour – although an effective manager should also be able to stand their ground to ensure that the terms of conditions of the contract are of benefit to their company.
Why is procurement and contract management important?
Procurement and contract management is important for a number of factors. An effective strategy helps organisations in the public or the private sector to reduce costs.
Furthermore, it helps optimise operational performance and conform to any new legal regulations. Also, it helps avoid or resolve any potential disputes between the company and contractor, and ensure that contracts are beneficial to the company.
Effective procurement and contract management strategy is essential. It’s vital to maintaining a business’s productivity, efficiency, and financial viability.
Establishing solid and beneficial relationships with contractors and vendors is a key element of running most businesses – from small one-person operations to large corporations with hundreds or thousands of employees.