With disruption as the new normal, smart companies are looking to strengthen their existing procurement and delivery agreements wherever possible, and ensure their new contracts are written to anticipate and mitigate supply chain issues.
Many contract managers and procurement specialists are taking a magnifying glass to their agreements in a way they haven’t before:
While these specific examples of supply chain disruption will resolve over time, they highlight a persistent issue – many supply chain contracts are simply not written to handle the extreme volatility and risk of today’s fragile and interconnected global system. In some cases, companies are using contracts and clauses that have remained static for multiple years, just copied and pasted from one agreement to the next, with little need to alter them – until now.
But getting a handle on hundreds or even thousands of complex contracts with a myriad of supply chain partners is a massive undertaking. Business professionals have to take time away from critical responsibilities to pore through lengthy documents and manually extract the relevant information for later analysis. It’s difficult, time-consuming, error-prone work, and extremely expensive in terms of both dollars and time. It’s no wonder these agreements have remained static for as long as they have.
In recent years, some contract lifecycle management (CLM) and intelligent document processing (IDP) vendors have begun offering limited data extraction for specific properties. While these services can be helpful, they usually fall short of the precision and customizability needed for nuanced and detailed tasks.
More recently, consulting firms specializing in supply chain and logistics have started sprouting up, offering to outsource contract analysis and data extraction, often with the help of technology. While this solution sounds good, the work is usually still done manually, remaining expensive and error-prone as a result.
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Where these other solutions fall short, AI has shown the most potential to pick up the slack. AI has taken a long journey since it was first introduced, with some tools showing more promise than others. Unfortunately, many of the tools that have made it to market have offered the world and delivered a pebble.
That said, some software companies have led the charge in advancing AI to the point where now it can be utilized to effectively eliminate the remedial effort of analyzing contracts and other documents.
Docugami is one such software company that is transforming the way data and documents are processed. Docugami utilizes the most advanced AI, machine learning, and natural language processing to deliver on the promise of document understanding. It can create an XML representation of an entire set of supply chain contracts in 90 minutes, effectively turning written words that humans understand into a semantic .XML tree of information that computers can understand.
Supply chain professionals are utilizing this technology to update contract clauses, identify risks, and, equally importantly, to create a healthy work-life balance by managing vendors more effectively.
Never be left in the dark on your company’s agreements again.