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NEWS, IDEAS, AND INSIGHTS FROM THE SIRION TEAM
Strategic Procurement with Digital Contract Transformation
For a long time, procurement was focused on reducing the cost incurred in the supply chain cycle. The procurement strategies at the start of the globalization era are a testament to that. Procurement leaders were leveraging goods and services from across the world with the main aim of trimming supply costs, which led to supply chains spreading a bit too thin.
During the pandemic, however, organizations realized that the exclusive focus of cost-cutting was turning out to be detrimental to the supply chain resilience. During the crisis, enterprises did not have enough control or even full transparency into their supplier operations. As a result, they struggled with sourcing when their suppliers failed to meet their commitments.
This episode highlighted the need for a shift to strategic procurement. Strategic procurement entails ensuring the availability of goods and services in time by relaying an economic but durable and dynamic supply chain that takes into consideration all the potential risk factors.
For strategic procurement, leaders need to deep dive into data from the existing procurement process to devise a failsafe procurement strategy. Further, they need to analyze and manage suppliers, vendors, and third-party services providers, scrutinize and monitor their performance, account for risks, ensure compliance, drive timely interventions, and more.
To accomplish this, procurement leaders need quick access to relevant data.
Where to find all the crucial procurement data? In contracts
Supplier management metrics, information on business risks, compliance requisites – this information is available in different contracts governing relationships with suppliers. Leveraging information present in contracts can enable procurement leaders to make informed decisions in selecting suppliers and laying down obligations, terms, and performance parameters.
However, extracting information related to procurement can be complicated. In many enterprises, contracts are filed, managed, and stored in physical folders or in emails and other electronic information systems, that too, in more than one format – digital format, PDFs, and even paper. Fetching any information from this disjointed database in its original forms can be tedious, time-consuming, and expensive.
To implement strategic procurement, it is important to streamline the contractual data in one format, in one place.
Kickstarting strategic procurement with the digital transformation of contracts
Transforming legacy contracts into a single digital format and storing in a centralized repository can enable enterprises to get easy access to important information related to procurement. For that, enterprises can leverage smart contract lifecycle management solutions like SirionOne. The platform has the technology to draw out procurement contracts from different systems, standardize them and move them to a repository.
Powered by AI analytics, SirionOne, beyond streamlining the contracts, can offer various insights to procurement leaders. For instance, procurement contracts should contain specific obligations to ensure supplier cooperation with regulators. The AI-led platform can search and reveal if the obligation is included in the contract in its present state. Further, it also enables enterprises to update the contracts if needed.
The need for amending contracts due to price changes and regulatory changes can occur frequently in today’s dynamic market landscape. In many organizations, procurement teams still need to change the terms and obligations in all their contracts manually to meet these requirements. Leveraging an AI-led contact management solution, SirionOne, can compare procurement contracts against a standardized contracting clause-template library, flag business risks, make amendments in contracts if required and ensure compliance.
Contract digitization – broadening the scope of the procurement function
Digital transformation of contracts can help expand the scope of procurement. Digitization of contracts enables procurement leaders to take a strategic approach, broaden its scope from just cost savings to gaining visibility into the procurement process, improving the supplier selection processes, managing supplier relationships more effectively, and more.
If you are interested to know how you can adopt a strategic approach to procurement with the digital transformation of contracts through an AI-led CLM technology solution, get in touch with us.