What is the difference between procurement and contract management?

Procurement sets the stage with its upstream processes, which help identify the need and strategically acquire goods and services. Contract management is a downstream process that ensures the play unfolds as initially envisioned during the sourcing phase.

As we know, the procurement process comprises steps from identifying needs and sourcing a supplier strategically to negotiating and securing the contract. On the other hand, contract management is a part of the larger procurement umbrella, which focuses on managing legally binding agreements that were created through procurement.

Procurement focuses on establishing the relationship between two parties (buyer and supplier) and outlines the terms of the contract. Contract management ensures that all parties involved adhere to the contractual terms by monitoring supplier performance and procurement KPIs regularly.

In short, procurement ensures that the best deal is found and a contract is signed, whereas contract management sees the contract through and ensures that it performs as promised.