Contract management in procurement involves the management and administration of contracts between a buyer and a supplier. The main functions involved in contract management include:
- Contract creation: This involves drafting a contract that outlines the terms and conditions of the procurement agreement, including pricing, delivery schedules, quality standards, and payment terms.
- Contract negotiation: This process involves discussing and finalizing the terms of the contract with the supplier, including any changes or amendments to the original agreement.
- Contract execution: Once the terms of the contract have been agreed upon, the contract is signed by both parties and becomes legally binding.
- Contract monitoring: This involves keeping track of the supplier's performance and ensuring that they are meeting the terms of the contract, including delivery schedules, quality standards, and pricing.
- Contract compliance: Ensuring that both the buyer and the supplier adhere to the terms and conditions of the contract, and addressing any breaches or discrepancies that may arise.
- Contract renewal or termination: Contract management also involves deciding whether to renew the contract with the supplier or terminate the agreement based on performance, changes in requirements, or other factors.
In general, contract management in procurement involves ensuring that the terms of the contract are followed, and that the relationship between the buyer and the supplier is effective and beneficial for both parties. This can involve a range of processes and activities, including communication, documentation, negotiation, and performance monitoring.