What is the difference between procurement and contract management?
Procurement is the entire process used to fulfill those organizational needs that require external vendors. It includes sourcing, risk management, supplier management, the procure-to-pay cycle, Purchase Order and Invoice management, and vendor performance tracking and relationship maintenance. It further includes spend analysis and budget and contract management and is tied closely to the Accounts Payable workflow.
Contract management is an essential part of procurement. It involves negotiating and drafting mutually beneficial contracts with vendors, storing them, and ensuring their timely renewal. Mistakes in this process can cost an organization and can even lead to lawsuits.
The use of procurement software can cater to both these processes. Such software not only automates the P2P cycle but also lets teams identify the vendors with which long-term contracts will be suitable. These contracts can then be digitally stored and the software notifies the users when the expiration date of the contracts approaches.
Recommended Reading:
Sourcing vs Purchasing
Procurement vs. Purchasing
Direct vs Indirect Procurement
Purchase Order vs Invoice
RFI vs RFP vs RFQ
People also ask
- How to develop a procurement strategy?
- Difference between procurement and strategic sourcing
- How does procurement software work?
- What is procurement software?
- What is source-to-pay?
- How to manage procurement risks?
- What is category management in purchasing?
- What is spend analysis?
- What is e-procurement?
- What is a procurement card?
- What makes good procurement software?
- How to measure ROI in Procurement?
- How to reduce costs with procurement spend analysis?
- How can procurement enhance business profitability?
- How to reduce costs with procurement spend analysis?
- How should you measure procurement performance?
- What is procure to pay in accounts payable?
- What are the challenges in the procure-to-pay process?
- What is the difference between procurement and contract management?
- What is indirect procurement?
- What are the examples of direct and indirect procurement?
- What are the benefits of eProcurement?
- What is a procurement plan?
- How to solve procurement challenges?
- How to automate the procurement process?
- How to improve the procurement process?
- What are supply chain and procurement?
- How to improve the procure to pay cycle?
- How to make procurement more efficient?
- How to measure procurement KPIs?
- How to measure procurement performance?
- How to measure cost savings in procurement?
- How do you keep track of all purchasing activities?
- What is the main purpose of a procurement audit?
- How to optimize the procurement process?
- Purchase-to-pay vs. Procure-to-pay
- How to implement centralized purchasing?
- How to make a procurement plan?
- What are the documents used in the procurement process?
- What Are Two Advantages of the Procurement Integrated Enterprise Environment?
- How to manage a procurement system?
- How to choose the right procurement method?
- What are the best procurement strategies?
- What is a procurement policy?
- How to improve the procurement department?
