This chapter covers the following topics:
Procurement contracts play a critical role in all businesses. Companies rely on procurement contracts to define:
Specific products or services that they buy.
Contract terms governing their price, shipment, payment, quality, and other mutual obligations of the involved parties.
Oracle Procurement supports the basic business processes of the procurement contract life cycle. Oracle Procurement Contracts enhances the ability of buying organizations to manage these stages by adding sophisticated contract management and compliance features to Oracle Purchasing, Oracle Sourcing, and Oracle iSupplier Portal.
Note: Oracle Contracts and Oracle Purchasing are mandatory prerequisites for Oracle Procurement Contracts; Oracle Sourcing and Oracle iSupplier Portal are optional.
Oracle Procurement Contracts supports all the stages of a complete contract life cycle. The key stages of the contract life cycle are:
Renegotiate and Close Out Contracts
Note: In Oracle Procurement Contracts Implementation and Administration guide, the expressions "contract" and "business document" both imply any Sourcing or Purchasing document that contains contract terms. When appropriate, the more explicit expressions "sourcing document" and "purchasing document" are used.
You establish company-wide standards to manage your contracts by incorporating best practices that ensure all contracts are authored and executed based on approved legal and business policies and procedures. This streamlines your processes and reduces contractual risks.
When you author contract terms, you leverage standard clauses, templates, and business rules set up in the library to define contractual obligations driven by legal and business requirements. You also set up and monitor tasks that enable the fulfillment of these obligations.
During negotiation, you create sourcing documents, such as RFIs or RFQs, with draft contract terms. Suppliers review, respond, and may suggest changes to the contractual terms. After all parties have reached agreement, and all sourcing documents have been submitted, an award is made. You track and archive all interactions with the prospective sellers for retrieval in case of disputes.
For the contract approval and signature process, you specify and communicate the guidelines to the concerned individuals in your organization, and you authorize who can sign the contracts in your organization. For standard contracts you fine tune your review process; for exception cases you allocate additional legal review time.
As you execute the contracts, you capture transactional data to enforce the agreed upon contract terms. The contracts are monitored to ensure that the contractual obligations, as defined in the contract terms, are fulfilled. Alerting and escalation mechanisms are defined and adhered to.
You define a formal contract change request process for your organization and the supplier community. Amendments to contract terms are routed to designated individuals for approval. You keep track of the changes for audit trail purposes.
After all contractual obligations have been fulfilled or the contract has expired, you can renegotiate the contract to obtain optimal market pricing, or you can decide to close out the contract.
The Enterprise Contracts Search feature enables you to search for keywords and text in structured data (such as contract terms) and unstructured data (such as text contained in attached documents). The search is performed for Oracle Purchasing, Oracle Sourcing, and Repository Contracts.