Each team member of the procurement department is going to have a specific role in the procurement process. Staffing the procurement team with informed individuals who are capable, knowledgeable, and take ownership of their roles within the department is important in building an effective, and efficient procurement team. Everyone involved in procurement should have a clear understanding of how their job functions play into the overall procurement strategy. This extends from upper management to procurement team leaders and all the way down the corporate ladder. Contract management is a vital aspect of the procurement process. A contract manager, in regard to procurement, is one of the most important roles among the procurement team. Acting as the bridge between vendors, procurement software, and the company itself, contract managers are the waystation for communication.
Communication between contracted suppliers and the procurement team can often be high in volume and difficult to follow without a proper paper trail. With an effective contract manager, these communications are streamlined and should be organized in detail within the procurement software. This centralizes these communications and makes them accessible for any number of reasons. Centralizing these communications also makes it easier for contract managers to take charge of contract security.
Establishing stable and secure supply chains builds multiple layers of value into a company. This value stems from aspects such as customer-trust, and lifetime savings. Savings aren’t only a result of having consistent and steady contracts, but also from maintaining lifetime partnerships that grow in value.
The Role of The Contract Manager
The contract manager has many functions built into their job description. The procurement team relies on the contract manager to establish supplier relationships that are long-lasting and mutually beneficial. Finding these contracts and maintaining them is only the start. In addition to this, contract managers need to be prepared to handle off-contract purchases, as well as staying updated on the length of existing contracts; preparing to hunt for new deals when the time presents itself.
Establishing Initial Contracts
This is arguably the main and most important function of a contract manager within a procurement team. Finding suppliers with which to establish an initial contract is an integral aspect of the role. This function is conducted with procurement software that allows contract managers to find credible, accredited, and certified suppliers that are trusted by consumers and the industry alike. This is vital, as conducting business with unreliable suppliers is a risk that businesses want to avoid.
Having a contract manager dedicated to establishing the initial contract with reliable and sustainable suppliers sets in motion the rest of the procurement team activities which lead to the acquisition of inventory.
Off-contract purchasing is another function that’s overseen by contract managers. It’s the process of supplementing the current supply chain with additional purchases from vendors that aren’t currently under a long-term contract with the company making the purchase. These transactions are a fantastic way for companies to enable custom orders or bolster their inventory in the event of a demand spike. Off-contract purchases also come in handy when there’s a sustained demand spike, while it provides a sort of temporary relief on the supply chain while the company seeks more long-term contracts through which they can source.
While off-contract purchasing can be costly, procurement professionals armed with powerful procurement software are able to cultivate data and make informed decisions on when and where to purchase off-contract; ultimately, saving the company money and time.
Replacing Fading Contracts
Not every contract is worth renewing. There are often going to be suppliers fading out after their initial contract. These companies might simply be replaced by a company offering higher volume at a smaller per unit cost or could fade out of the supply chain entirely. Either way; these actions are going to be overseen by the contract manager. Responsible for finding replacement suppliers when it’s time to move on from any supplier for one reason or another – procurement contract managers are going to take on the important task of finding new suppliers when it’s time.
There are many functions involved in the procurement department of any company, in any industry. Each team member of a procurement team is going to play a vital role in the procurement cycle. The contract manager, however, is one of the most important and useful team members involved in procurement and software relations and can help companies avoid major contract management issues.
Maintaining Contractual Records
Good contract managers know that even a signed and settled contract is still very much alive and active, especially when it comes to settling auditing processes. Keeping thorough records of all documents an organization has even after a procurement contract is seen through to completion is essential for the efficiency of an organization. Most importantly, record management mitigates risks by serving as an audit trail and provides evidence that is easily accessible.
A contract manager requires a reliable and secure filing system. In the past, this meant extensive email folders and physical file cabinets. However, in today’s digital world, those tools are not adequate or efficient for the rapidly increasing business pace. Today, contract managers rely on automated, cloud-based procurement software to store and maintain contractual records.
Development and Implementation of Policies and Procedures
Procedures and policies ensure that employees carry out an organization’s mission every day. In addition, established procedures for all people involved in the contract process reduces costs and organizational expenses. Documenting established procedures increases efficiency and sets precedents down the road. In addition, having policies intact to deal with customers, independent contractors, and employees helps in several ways:
Simply put, policies and procedures:
- Help maintain best practices
- Provide a baseline for accountability expectations
- Protect against regulatory, legal, and liability issues
Facilitators for Crucial Procurement Functions
Contract managers play a crucial role for any organization as they direct and oversee contracts throughout their different lifecycle stages. For example, contract managers act as the liaison between employees, companies, vendors, and independent contractors. Additionally, contract managers serve as the main facilitators in the below frontiers:
- Negotiations. Contract managers spearhead major negotiation processes, including negotiations involving vendors, customers, and enterprises.
- Recommendations. Contract managers offer actionable procurement recommendations depending on the changing supply landscape.
- Recordkeeping. Contract managers serve as the main liaison officers in different areas of record keeping.
- Monitoring. Contract managers monitor different procurement activities to ensure that operations run smoothly.
- Change management. Contract managers support the smooth transition from one supply process to another and act as other crucial facilitators for change.
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