Just like contracts, relationship with suppliers is one of the most valuable assets of a company. Not only these two are interdependent but also supplier management is crucial for managing compliance and mitigating risk. Moreover, as both of them are managed based on lifecycles, a single source of integrated Master Data serving both supplier and contract management helps in monitoring factors like obligations, milestones, opportunities, etc. So, at a microscopic level, it means it is vital to have the right suppliers in the right contracts. Automation of the process lets the teams focus on their relationship instead of getting stuck in minor details. Contract Management software with advanced AI capabilities, help you streamline workflows across your contract lifecycle, through timely suggestions, diagnosis, and predictions, for error-free and dynamic contracts.
Contracting plays a significant role in the context of a company’s procurement efforts. Hence, good contract management is vital for improving supply chain performance by:
- Portfolio Optimization
- Performance Management
Despite the emergence of digitization many businesses still rely on paper-laden manual contracting that lacks optimal management of supplier contracts. This, in turn, exposes the companies to increased costs, reduced negotiation leverage, missed revenue opportunities, poor compliance, and regulatory backlash.
Material Handling & Logistics suggests that companies adopting advanced contract management solutions have been able to:
- Reduce material and services costs by 2-7%
- Cut the lifecycle process to half, thus, saving a lot of time
- Reduce contract administration costs
- Improve contract compliance by 50-55%
- Cut down the operational and regulatory risk to a great extent
- Increase revenues and profits
How CLM Helps to Prevent Supply Chain Risk?
Large enterprises often manage thousands of contracts at a given time, and they cannot afford to leave room for supply chain risks as it can cost them millions of dollars. Effective handling and organization of these documents from the initial stage help to reduce supply chain risk. For instance, the knowledge of which contracts that performed well in the past and the ones had issues plays a vital role in framing future supplier relationships. An advanced contract lifecycle management solution offers the necessary tools that help in the efficient management of all these documents and information. Zycus’s Clause Library uses a comprehensive collection of pre-approved clauses including alternate and fallback clause suggestions.
Moreover, drafting supplier contracts allows organizations to include clauses that would guard them against potential risks. A contract management system that has a comprehensive collection of templates and approval features ensure that these clauses would be viewed by the concerned people and can be saved for future use. Functionalities like indemnification and other clauses that identify potential risks and assign suitable responsibilities to both the parties are of great help.
Advanced Contract Management Solution for Shaping up Supply Chains
A lot of organizations are shifting to automated contract management solutions for real-time visibility, smoother collaboration with suppliers, and simpler business processes. Automation of contract lifecycle management ensures accuracy and eliminates the risk of human error. It also streamlines the supply chain in the following ways:
Real-time Visibility: Automation offers access to real-time information, which in turn, enables enterprises to instantly react to any change and make the right decision. Advanced CLM solutions provide a platform for real-time conversations between suppliers and vendors regarding demand, or any other issues like delays or shortfalls. This transparency helps organizations to predict potential problems and think of solutions accordingly.
Supplier Risk Alerts: Automated contract management systems keep an eye on potential risks by constantly monitoring shortages and breach of contract if any. Moreover, an artificial intelligence powered contract management solution warns against risky clauses before the contract is signed. Zycus’s Merlin Protector offers real-time clause parsing for instant and proactive risk identification.
Faster Business Processes: Eliminating the slow manual processes, automated CLM solutions allow the employees to focus more on how to bring home additional value for the company. By enabling a centralized secure system, it also takes care of the hurdles in the path of the supply chain such as – coordination, monitoring, inventory checks, and shipping. Also, organizations and suppliers can directly submit the contracts and other requests in the system, thus, speeding up the overall business process that includes sales, procurement, and legal operations.
Compliance Management: An AI-led contract management software is programmed to act as a gatekeeper for compliance with regulations and corporate policies. It also ensures that all the steps were followed considering the legal boundaries. The data collected acts as proof that both the parties were in compliance. Zycus’s AI capabilities help enterprises boost company performance and mitigate obligation and compliance-related risks through effective contract lifecycle management.
Remote Work Support: In order to keep up with the new remote work culture, organizations need to be well-equipped to deal with the changes. An AI-powered contract management solution keeps the supply chain processes running efficiently even in a remote work set-up as the whole system is cloud-based and automated.
In this ever-changing market, demand and supply are highly unpredictable. This is where an advanced contract management solution comes to the rescue. It helps enterprises to get a clear view of their situation, efficiently communicate with suppliers, and prepare for potential risks, while maintaining compliance.
An organization needs to act smart for taking advantage of the competition among potential suppliers; compare the options and analyze who carries the risks and at what cost. With its advanced search capabilities, Zycus Merlin extracts metadata elements for contract risk analysis, thus, processing up to 10,000 agreements in a jiffy while providing proactive insights and intuitive visualization on all performance KPIs.