CONTRACTS: THE BACKBONE OF PROCUREMENT
INTRODUCTION
Contracts are a critical part of the procurement cycle. They define the terms and conditions of a transaction, and they help to ensure that both parties
are aware of their obligations.
Contracts can also help to minimize disputes and to resolve problems that may arise during the course of a transaction.
FOUR MAIN STAGES IN THE PROCUREMENT CYCLE
PLANNING:
This stage involves identifying the need for a product or service, and developing a plan for procuring it.
SOURCING:
This stage involves identifying potential suppliers, and issuing a request for proposal (RFP).
EVALUATION:
This stage involves evaluating the proposals received, and selecting a supplier.
CONTRACTING:
This stage involves negotiating and signing a contract with the selected supplier.
Contracts play a role in all four stages of the procurement cycle. In the planning stage, contracts can help to ensure that the right requirements are
identified. In the solicitation stage, contracts can help to ensure that suppliers are aware of the requirements, and that they are able to provide a
proposal that meets those requirements.
In the evaluation stage, contracts can help to ensure that proposals are evaluated fairly, and that the best possible supplier is selected. In the
contracting stage, contracts can help to ensure that the terms and conditions of the transaction are clearly defined, and that both parties are
aware of their obligations.
THE IMPORTANCE OF CONTRACTS IN PROCUREMENT
Contracts are important in procurement for a number of reasons. They:
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Define the terms and conditions of a transaction: Contracts define the rights and obligations of both parties to a transaction. This helps to ensure that both parties understand what is expected of them, and that there are no surprises down the road.
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Minimize disputes: Contracts can help to minimize disputes by clearly defining the terms and conditions of a transaction. This can help to prevent misunderstandings and disagreements, and it can make it easier to resolve any disputes that do arise.
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Resolve problems: If a problem does arise during the course of a transaction, a contract can help to resolve the problem by providing a framework for negotiation and dispute resolution.
BEST PRACTICES FOR CONTRACT MANAGEMENT IN PROCUREMENT
There are a number of best practices for contract management in procurement. These include:
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Create a contract management process: A contract management process will help to ensure that contracts are managed in a timely and efficient manner. The process should include steps for identifying contracts, negotiating contracts, monitoring contracts, and closing contracts.
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Have a clear understanding of contracts: Make sure that you understand the terms and conditions of each contract, as well as your rights and obligations under the contract.
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Monitor contracts: Keep track of the performance of your contracts and make sure that both parties are meeting their obligations.
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Take action if necessary: If a contract is not being performed as agreed, take action to remedy the situation. This may involve mediation, arbitration, or litigation.
CONCLUSION
Have a clear understanding of contracts: Make sure that you understand the terms and conditions of each contract, as well as your rights and
obligations under the contract. Monitor contracts: Keep track of the performance of your contracts and make sure that both parties are meeting their obligations.
Take action if necessary: If a contract is not being performed as agreed, take action to remedy the situation. This may involve mediation, arbitration, or litigation.
Contracts are a critical part of the procurement cycle. They define the terms and conditions of a transaction, and they help to ensure that both parties
are aware of their obligations. Contracts can also help to minimize disputes and to resolve problems that may arise during the course of a transaction.
By following the best practices for contract management in procurement, you can help to ensure that your contracts are managed effectively and that
you get the most out of your contractual relationships.
NEXT STEPS
Kemisoft Group is a Certified Salesforce and Nintex ISV Partner, enabling us to work with organizations in a range of different industries to help them
streamline their contract lifecycle management processes, thus having a positive impact on the procurement cycle.
Kemisoft has also developed RedLining Manager, our innovative contract redlining solution.
If you’d like to explore how Kemisoft can help your organization thrive in the contract management space, visit our website at http://www.kemisoft.com or
contact our Business Development Team at chris.roos@kemisoft.com