Procurement teams across organizations are always under tremendous pressure to primarily achieve the following three major goals

• Reduce spend
• Manage risk
• Find hard-dollar cost savings

Obviously, there are quite a few challenges that procurement departments need to deal with and address to achieve these goals. Out of so many challenges we have identified 3 of them that can make the biggest impact on your business which Artificial intelligence can assist with.

Challenge 1 – Getting your hands around the basic data needed to perform your job

We’ve encountered large corporations storing contracts in multiple places whether they be repositories, P2P systems, CLM systems, or their CRM.  Some of the information from the documents has been keyed in manually.  It is incomplete, inaccurate, or even non-existent.  Whatever the case, many people don’t trust it so end up reading through the details of the Contract manually and if the file has been scanned there’s no way to do any searches.

Some of the impacts include, not knowing the most recently agreed upon terms and not knowing the risk of the contracts.  And there’s always that contract that auto renews even though you may not be using the product or services.

Challenge 2 – Need for time and resources

Everyone has issues with time and resources.  No procurement team is ever large enough and there’s never a lack of things to do.  Also, people get stuck on very mundane tasks and organizations are not using employees’ skills to the highest capacity.  One of the biggest time suckers is reviewing contracts. Whether they be very complex strategic contracts that take a lot of time or simple ones that you may go over and miss something minor that makes a huge impact later.  Also, if you are working with 3rd party paper, identifying how much it deviates from your standard terms can be difficult especially with newer employees who may not have the tribal knowledge that the more seasoned ones have.

Challenge 3 – Supplier Relationships

In many cases there is a lack of clarity whether all your suppliers are complying with the contracts and in some cases, we do not even know which supplier has an active contract in place. If there are multiple contracts with the same supplier that were executed by different lines of business, there could be pricing irregularities. In some cases, maverick spend, or purchases from suppliers outside your procurement policy, can amount to as much as 80% of an organization’s total spend.  

So, people having access to the contract and being aware of what’s in them is very important.  It all comes back to data and whether it is accurate and is it in an executable format. 

How can AI super charge your procurement teams?

Artificial intelligence coupled with technologies like Machine learning, Natural language processing, Computer Vision, Deep learning have the unique advantage of understanding the content inside documents along with the intent of the content and produce a lot of insights and analytics to help users in better decision making around their data. While there are a number of technologies to extract data and important information from documents like the OCR(Optical character recognition) and produce analytics, the prime advantage of AI based technologies is to improve the capabilities to analyse and understand documents with very less human intervention.

However, it is very important for Procurement teams to identify a right AI based document analytics platform or tool that has the following key capabilities to be truly effective in empowering them

• Automated Data Extraction
• Third Party Paper Reviews
• Robust Search capabilities
• Reporting and Dashboards
• As well as notifications that can be pushed to the appropriate people at the appropriate times.

These are all essential functionalities to look for when evaluating an AI tool

Benefits of using AI.

I can’t stress enough on how important data is!  If you are extracting the correct data and able to search through contracts easily then you can really get a lot of return on investment in your tool.

1. By pulling pertinent information from your contracts, you can identify preferred suppliers.  Whether it be who is giving the best pricing or which companies your employees are going to for product or services more than others.
   
   
2. Avoiding auto renewals is another benefit.  AI tools can identify whether an auto renew exists and electronically notify you before the cancellation deadline.  It can read your contract and identify specific dates even if they are embedded in the contract stating 60 or 90 days before the contract ends. It can also help with the reduction of spend by knowing what has been agreed upon so you can track compliance.
   
   
3. AI tools don’t completely take the human element out of reviewing contracts.  It can just assist your team in being more effective and has been known to reduce efforts by 50%.  It can help you understand key terms and risk and really help get those new employees up to speed with company standards and allow less room for common human error.
   
   
4. Finally, a powerful AI tool can help you get the insight you need to better prepare to negotiate contracts and make better decisions.  Whether it be consolidating agreements to get better discounts, knowing how renewal dates coincide with suppliers’ fiscal year to get additional cost saving for early renewals or making amendments to contract to lower their risk.

All this can be done using Artificial Intelligence and DocSkiff document processing platform does exactly this. To know more information about the platform and see how it can help super charge your procurement teams, visit https://www.docskiff.ai