3 Key Ways to Manage Risks in Procurement Through Contract Management
Contract management process
The contract management process involves the management of contracts between suppliers and buyers to fulfill the contractual obligations compliantly and document them appropriately. Contract management, sometimes also called as contract administration is the sum of the procedures and processes that an organization may implement to manage the execution, negotiation, performance, alteration, and termination of contracts with several parties like vendors, customers, distributors, employees, and contractors. This process is one of the most crucial activities for any business arrangement to succeed.
What is Contract Management in Procurement?
Contract management is an intrinsic part of the procurement cycle. The contract management process helps contract managers to manage contracts properly by addressing the management of transition and monitoring the performance. An effective contract management process also ensures that both parties fulfill their contractual and commercial commitments. This should be developed for all contracts ranging from medium to high risk. This process involves the continuous process of procurement that ensures suppliers adhere to their agreed contractual obligations. It also safeguards any negotiations from the future changes that need to take place.
Now, let’s look at three instances where the contract management process helps manage risks in procurement:
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