Objectives of Procurement Management
The objectives of procurement management can range from the most general, such as “buying goods and services,” to the more complex, such as “supporting organizational goals within the team.” Procurement and purchasing is one stop on the supply chain, but everyone suffers if there’s a break in the chain. Every link is important, and being knowledgeable about the entire supply chain, as well as the ins and outs of procurement management, are imperative to keep the entire team running smoothly and as one unit.
Read on to learn more about the objectives of procurement management, and how this relates to contract management as well as to ethics.
What Is Procurement Management?
To understand the objectives of procurement management, you first have to understand what procurement management is. Procurement management essentially takes a look at organizational spending and attempts to optimize it while increasing quality and service. However, in procurement, organizational spend typically goes toward preferred suppliers (and their goods and/or services) to produce a final product or good on the manufacturing side of the organization.
Your company needs to purchase (procure) the goods or services to make the final product. The start-to-finish process of procurement can be a complex one, and procurement itself is just one piece of the supply chain. In modern times, many procurement managers have been looking for the best procurement software to digitize procurement management and make the entire process more streamlined.
The right software can simplify much of the complexity involved in the process, making it more cost-effective, less time-consuming, and gives the company more choices when it comes to suppliers. It also gives companies more transparency and more opportunities to build better relationships with their suppliers of choice.
Objectives of Procurement Management: Managing Contracts
You may wonder, “what is contract management in procurement?”. Contract management in procurement refers to managing contracts (the legal documents you hold with your suppliers ) through the procurement process. When you and a supplier agree on terms, then you sign a contract. If you’re using eSourcing software or other types of procurement software, you can easily manage the contracting process and contracts online.
The right software allows you to move freely through tough portions of contract management, such as easy-to-access vendor management dashboards rather than manual purchase or negotiation orders, and monitoring of the contract and expense reports.
With the right software, you can run analytics to ensure all of your spending is on point; but you can also run analytics to make sure all of the terms of your agreements are being met—effectively ensuring compliance. In addition, you can easily see the next group of contracts coming up for renewal allowing your team to plan your sourcing or contract renegotiation plans proactively. Most recent eSourcing types of software are a far cry from trying to wade through Excel spreadsheets, pulling your hair out. These are easy and intuitive to use. Contract management is one of the most essential objectives of procurement management.
Objectives of Procurement Management: Risk Evaluation
Another big objective of procurement management evaluates risk. Risk also ties into ethical issues in procurement management. Sometimes, when it comes to managing risk, history has shown that not all suppliers and managers have acted ethically.
Similarly, as with managing contracts, the right software can help you analyze and manage risk the right way. If you analyze it properly and are willing to be transparent with your suppliers about how much risk you’re willing to take, it can often make the process that much easier. Also, a good rule of thumb is to get everything in writing, from the pre-sourcing stage.
Then, there are no surprises when it comes time to sign contracts, and you’re left looking for another supplier. eSourcing and eAuction software permit multiple suppliers to place bids, so you can compare and contrast different vendors, ultimately choosing the one you feel will provide the best balance of risk, cost, quality and service, not to mention the one you feel is the best fit for you.
Learn more about the objectives of procurement management with an EC Sourcing demo, or contact us today at 1-888-353-9737, option 1.