Mastering Procurement With Oracle NetSuite Contract Management

Content

• What is Procurement?
• Procurement Primary Stages
• Does contract management affect procurement?
• How does Oracle NetSuite Contract Management help with procurement?
• Vendor Integration
• Self-service Vendor Contracts
• Supplier Performance Management
• Purchase Order Alignment
• Visibility and Reporting
• In short

Acquiring goods or services is a necessity for any business establishment. From software techs to the healthcare industry, everyone is dependent on the procurement process for the smooth functioning of their daily operations. Oracle NetSuite is a popular choice among leading businesses to manage their supply chains and optimize procurement processes. 

Effective procurement is essential for ensuring a steady supply of resources, controlling costs, and maintaining the quality of products and services. Contracting has become a significant aspect of the procurement process, allowing businesses to acquire good deals in a short time. Then it makes sense for the procurement and legal team to share brains and platforms for mutually beneficial results. And NetSuite integrated Contract Management Software is the way to do it.

What is Procurement?

Procurement involves acquiring goods, services, or works from external sources, typically vendors, suppliers, or contractors, to fulfill an organization's needs and objectives. The procurement process encompasses a series of activities, from identifying the need for a product or service to final payment and supplier performance evaluation. The procurement process can vary in complexity depending on the organization's size, industry, and specific requirements. Companies can be on both sides of the procurement process; they can be buyers and sellers.

Here are the primary stages of the procurement process:

1. Sourcing and Supplier Selection: Identifying potential vendors and suppliers who can provide the required goods or services. Supplier evaluation involves considering quality, cost, reliability, and compliance with contractual terms.
   
   
2. Negotiation: This involves negotiating terms and conditions with potential suppliers, including pricing, delivery schedules, payment terms, and any additional requirements. Effective negotiation ensures that both parties agree on favorable terms.
   
   
3. Purchase Requisition: Organizations can Initiate the procurement process by generating a purchase requisition, which outlines the items or services needed, quantities, specifications, and other relevant details.
   
   
4. Purchase Order Creation: Generating a purchase order (PO) based on the purchase requisition. The purchase order is a formal document that serves as a contract between the buyer and the supplier, specifying the purchase terms.
   
   
5. Order Fulfillment: The supplier processes the purchase order, prepares the goods or services, and delivers them according to the agreed-upon terms and timelines.
   
   
6. Receipt and Inspection: Upon delivery, the buyer inspects the received goods or services to ensure they meet the specified quality and quantity requirements.
   
   
7. Invoice Processing and Payment: The supplier submits an invoice based on the purchase order. The buyer verifies the invoice against the purchase order and receipt of goods before making the payment.
   
   
8. Vendor Relationship Management: Building and maintaining positive relationships with suppliers. Effective vendor management involves ongoing communication, performance evaluation, and collaboration to ensure mutual benefits.
   
   
9. Contract Management: Managing contractual agreements and terms with suppliers is vital for an efficient procurement process. It involves tracking contract milestones, renewals, amendments, and compliance obligations.
   
   
10. Risk Management: Identifying and mitigating risks associated with procurement, such as supply chain disruptions, quality issues, and contractual disputes.

So vendor contracts and vendor contract management are a part of the procurement process. Does that justify integrating both processes and platforms? We’ll learn more about that in the next section.

Does contract management affect procurement?

Contract management and the procurement process are closely interconnected. Competent contractual agreements are essential for procurement teams to acquire suppliers or vendors. Moreover, the compliance and performance of contracts deeply affect vendor relationships. They are critical to ensuring organizations get the most out of their vendors and suppliers.

• Vendor Selection and Negotiation: Well-structured contracts with specific terms and conditions can attract reputable vendors and facilitate smoother negotiations. They can also include clauses related to pricing, discounts, delivery schedules, and quality standards, which can lead to more favorable agreements.
  
  
• Terms and Conditions: Contracts define the terms and conditions under which businesses procure goods or services. Effective contracting processes help to reduce the likelihood of misunderstandings or disputes during procurement and delivery.
  
  
• Change Management: Effective contract management supports change management during the procurement process. If there are changes in requirements, scope, or other aspects, contracts can outline the process for managing these changes, ensuring that both parties are aware and in agreement.
  
  
• Compliance and Risk Mitigation: Vendor contracts outline compliance requirements, regulatory obligations, and risk management measures. Integrated contract management ensures that procurement activities adhere to these requirements, reducing legal and financial risks associated with non-compliance.
  
  
• Procurement Strategy: Contract management aligns with an organization's procurement strategy. Well-managed contracts support strategic goals, such as cost reduction, risk mitigation, and value creation through procurement activities.
  
  
• Supplier Relationships: Contracts contribute to establishing strong supplier relationships. Effective contract management helps build trust and transparency between buyers and suppliers, which can lead to more favorable terms and improved collaboration.
  
  
• Auditing: Contracts serve as valuable documentation for auditing and compliance purposes. Proper contract management ensures that procurement processes are transparent, well-documented, and traceable, facilitating internal and external audits.

How does Oracle NetSuite Contract Management help with procurement?

Integrating the leading ERP solution with Dock contract management software allows users to combine the features and data of both systems onto a single platform. The procurement team will benefit from real-time visibility into the contracting process, while the legal team can utilize access to accurate vendor data. 

      1. Vendor Integration

ERP system's integration with Dock 365 contract management software permits the two-way data sync of vendors or suppliers. Users can create a party profile in the CMS platform and sync to NetSuite to make vendor profiles and related information readily available on the ERP system. 

Similarly, organizations can import vendor data from the ERP platform to create contracts in contract management software. It eliminates the need for manual data entry and human errors in the contracting process. Thus, businesses can churn out vendor contracts with complete accuracy in no time. Furthermore, the bidirectional sync between ERP and CMS systems ensures that legal and procurement are always on the same page. 

        3. Supplier Performance Management

Tracking supplier performance throughout the business relationship is necessary to ensure profitable results. Contracts establish performance expectations and key performance indicators (KPIs) for suppliers. They ensure that both parties understand their roles, responsibilities, and performance metrics. This transparency makes it easier to hold suppliers accountable for their performance. 

Businesses can easily track and evaluate supplier performance by integrating Oracle NetSuite with contract management software. These metrics could include delivery timelines, quality standards, quantity thresholds, and other measurable criteria. As a result, businesses can assess whether their suppliers are meeting their contractual obligations regularly. It allows the procurement teams to make informed decisions about ongoing vendor relationships.

        4. Purchase Order Alignment

Purchase order management is creating, reviewing, tracking, and managing a company's purchase orders (POs). Integrating Oracle NetSuite with Dock 365 enables businesses to create purchase orders within the contract management platform. Moreover,  users can track changes in PO details or status (done from the ERP platform) from within the CMS system. 

The integrated system allows businesses to store purchase orders and related documents, such as quotes, contracts, and invoices, in a centralized system for easy retrieval and reference.  Moreover, access to POs and contracts within a single platform enables users to ensure that purchase orders are aligned with the contractual terms, minimizing discrepancies and ensuring accurate procurement.

         5. Visibility and Reporting

Contract management software offers a complete overview of procurement activities, obligations, and performance metrics. The integrated system provides the procurement team visibility into contract status, milestones, and compliance, supporting accurate reporting and decision-making.

Moreover, it enables them to collaborate with suppliers by providing them access to contract-related information, amendments, and updates. It can improve communication and facilitate smoother procurement operations. Contract management software integrated with the ERP platform also provides a basis for verifying supplier invoices against agreed-upon terms. Proper contract management ensures that invoices are accurate and aligned with the contract, reducing errors in payment processing.

In short

Contracts are the foundation of the procurement process, influencing vendor interactions, negotiations, compliance, risk management, and overall procurement strategy. Integrating Oracle NetSuite with contract management software ensures that procurement activities align with contractual obligations. The contract details drive procurement activities; easy access to the document encourages compliance and supplier performance. Shared data and platforms contribute to successful and efficient procurement operations. The procurement team can self-serve contracts and get real-time insight into supplier performance.