Key Benefits of Contract Management and E-Procurement

There are umpteen reasons why businesses need to include e-procurement and contract management into their systems.

Contract management and E-Procurement are essential parts of SCM that provide saving potential. Contract management works with managers in supplier relationship and services and goods that have negotiations. With E-Procurement, one can keep on identifying performance factors. These factors are important for successful delivery and management of the benefits.

Business economics today challenges the very concept of doing the same work repeatedly, even when one does it with extreme proficiency. As there is constant pressure to maintain low costs while producing high results, every supply chain manager should transform rather than simply improve operations.

Contracts are almost always poorly managed in a company. There may be hundreds of active agreements that total to thousands of contract clauses and terms for smaller companies. If such contract clauses and terms are not monitored before enforcement, they will carry no meaning at all. Procurement managers realize that putting reasonable prices on products is only a portion of strategic sourcing activity. The tools in contract management help businesses achieve the most out of those agreement terms, which buyers spend their entire effort discussing and negotiating.

Transactional advantages

E-procurement helps the paying process of a purchase happen online. Businesses may use online transaction tools, where products are essentially chosen from catalogues that are pre-sourced and submitted for e-approval. The tool then is linked to an ERP system’s back-end to enable entry, invoice payments, and collate management information.

Contract agreements are easy to access

After the contracts are signed, businesses with contract management tools usually store hard copies in different places. It gets filed by legal departments, stacked by procurement managers, and transported to stockholders. With contract management, companies can organize and store contract records in a centralized and easily accessible repository. One can just click on the mouse to review and download agreements, by guessing where the contract documents are located and giving the business a visibility where contracts are kept at that instant.

Compliance advantages

A major issue lies in compliance and unorthodox spending in any organization. It is not because employees intentionally overspend on processes, but because they are not aware. With e-procurement, one has tools like catalogs for processing standard orders.

Managing information benefits

Key identifiers may be commodity codes, cost centers, and so on. The unique identifier codes reduce errors and provide extremely elaborate everyday accessible data. This is necessary to maximize data use for strategic sourcing. E-procurement successfully implemented will give high-end information that is detailed. It will discourage additional expenditure on functions like data warehousing or mining.

More organized database, smarter spending

With contract management devices, you have searching and sorting functionalities and can quickly locate whatever documents are needed. With a comfortable catalog of the company’s agreements, the first way to minimize off-contract expenses can be formulated. It will help managers to quickly search all kinds of agreements being searched. Moreover, with an organized database, businesses may be able to spend smartly.

The last few years have continuously evidenced the benefits of e-procurement. Better sourcing and management information, user satisfaction and improved compliance are just a few of them. As for maintaining an easy flow of the agreements, contract management has been an effective and efficient tool. However, while selecting both, a contract management tool and e-procurement software, one needs to continuously ensure best practices in selection of a solution.