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.