KEY HIGHLIGHTS
- A quick read will help you understand ways in which GenAI enhances contract management with detailed text analysis, risk identification, and compliance checks, boosting accuracy and efficiency.
- GenAI streamlines routine contract analysis and risk assessment, reducing time and manual effort, and cutting costs by minimizing errors.
- Beyond contracts, GenAI improves procurement with supplier evaluation, demand forecasting, cost optimization, process automation, and market intelligence.
5 reasons why the Procurement Team requires GenAI
- Complexity of Contracts: Today, contracts for various business deals are multipage and can be so detailed that manual analysis may take a form and is likely to miss some critical information. GenAI has the features of carrying out text analysis and can help in this process.
- Risk Identification: In addition, GenAI can also learn from historical data as well as the current contract terms of customers, and predict the possible risks, or simple and complex anomalies that cannot be easily discerned with the naked eyes.
- Regulatory Compliance: It is difficult to updated on new regulations and compliance measures. As for the observation of contract standards, GenAI continuously updates the bank of knowledge and assists with guaranteeing compliance.
- Time Efficiency:Routine contract analysis may take a long time. As for the benefits of GenAI, they help to complete the review as fast as possible, facilitating procurement teams spending more time on decision-making rather than on paperwork.
- Cost Savings: GenAI has the potential of reducing many errors and inefficiencies that are associated with contract disappointments; therefore, could cut significant expenses on future contract renegotiations.
5 Benefits of Using GenAI to Reduce Contract Risk
- Enhanced Accuracy: Using machine learning, GenAI provides an analysis of contract terms with a much higher accuracy than that of a human being would provide when indicating contracting risks.
- Automated Risk Assessment: The use of AI can also enable algorithms to identify specific clauses and terms that are most dangerous and also recommend how to modify or avoid them.
- Predictive Analytics: If fed with historical data and records of previous contracts, GenAI will be able to foresee some problems that are likely to arise in the future.
- Consistent Compliance Checks: AI guarantees that all contracts are reviewed for compliance to the law and contract’s standards which eliminate contraventions.
- Streamlined Workflow: Routine activities like contract review and approval are authorizable and this quickens the procurement process and reduces manual labour.
Apart from Contract Risks, What Are Other 5 Solutions GenAI Can Provide for Procurement?
- Supplier Evaluation: Relative to supplier performance, GenAI can also reveal trends on aspects such as reliability, quality and price that would assist in selecting the right supplier.
- Demand Forecasting: Machine learning involves making conclusions based on historical data and predicting the best procurement plan for the company.
- Cost Optimization: If needed, GenAI can estimate the spending activity and define how costs could be reduced by negotiating with a provider or seeking help of another supplier.
- Process Automation:Many of the repetitive activities in procurement like order placing, invoice entry can be done through high automation thus eliminating some degree of manual work and error.
- Market Intelligence: Through market analysis, GenAI can understand trends in the industry and in prices of products, so that the procurement groups can make the right decisions.
