AI in Procurement can give enterprises real-time visibility into supplier spend to quickly identify missing contracts to reduce spend, negotiate better terms, and improve compliance.
Procurement organizations use a set of criteria to determine if the spend with a supplier should be governed by a contract. Every organization defines that threshold differently, yet only a few would agree that every purchase that does meet that criteria is actually under contract.
Markets evolve. The need for a certain supplier’s products and services may have grown. A relationship that may have started out as too small to justify a contract can suddenly cross a threshold – without anyone knowing that it happened.
In some cases, a purchase may be conducted outside the standard contracting process to save time. Or a contract may have not been designed to address a unique purchasing requirement.
Whether the intent was to address supplier growth, to meet a unique need, or to circumvent an established process, a significant portion of supplier spend may not be covered by a contract. And even if a contract existed, would you know? Could you find it? Procurement managers who can’t find missing contracts are at a significant disadvantage.
- When it comes time to renew agreements, they are in a weaker negotiating position.
- Purchases made outside of a contract can expose their company to risk.
- Bringing more spend under strategic management is impossible.
Turning information into insights with AI in Procurement
With real-time visibility into supplier spend that isn’t paired with an active contract, it’s easy to determine if a contract is lost, or if it exists at all. Procurement organizations typically experience benefits in three areas:
Negotiate from 5 to 15% cost savings by justifying volume discounts.
Reduced risk and improved compliance
Increase the amount of spend under contract to improve your ability to identify – and avoid – risk and compliance issues.
Improved decision-making capabilities
With a clear view of spend that isn’t associated with a contract, your entire enterprise will have access to the same data, leading to a vast improvement in the ability to make collaborative, well-formed decisions – proactively.
When using Suplari’s AI-assisted data spend clean-up, a large technology company identified cross-business unit spend that had been previously hidden due to a company parent/child ownership. The spend was large and did not have a formal MSA or contract. The company immediately entered into a new contract with the parent firm and was able to reduce the risk associated with this spend and gain rate savings from the negotiations.
Being able to easily identify missing contracts is one of the capabilities of Suplari Contract Intelligence. It’s part of a growing library of insights that extend the value of the Suplari Platform.
To find out more about what Contract Intelligence can do for you, check out our webinar on-demand, AI, Contracts, and Spend Data: Learn How to Negotiate the Best Supplier Deals and Reduce Spend by Millions.
Suplari helps procurement and finance organizations uncover the hard-dollar cost savings hidden inside millions of data points. By analyzing millions of sourcing transactions from disparate data sources, Suplari’s AI-driven platform generates the insights needed to reduce spend, increase compliance, and improve employee productivity. Our mission is to enable procurement organizations to achieve higher levels of operational intelligence, efficiency and effectiveness, so that their companies can invest in growth, innovation and their people. For more information, contact firstname.lastname@example.org.