Using Digital Capabilities to Transform Vendor Contracting
If there is a lesson highlighted from the past couple of years, it’s that the vendor contracting process is ripe for digital transformation. In an increasingly volatile marketplace, existing procurement workflows and the professionals who manage them are stressed by labor shortages and rising raw material costs. This tension exposes buyers to increased risks such as missed deadlines, insufficient supply or overpayment.
All this means is that for every $1B spent, the typical procurement team loses roughly $21M due to bad tradeoffs. In short, the reliance on paper documents, spreadsheets or other hand-entry tasks in the vendor contracting process is causing companies to lose money and competitive advantages. From the request for proposal (RFP)/quotation down to both the pre and post-execution contract analysis, the procurement agreement process is ready for an automated and integrated solution that can support organizations' compliance needs.
Modern conditions expose old problems in the vendor contracting process
Today, procurement teams are transitioning from tactical execution to broader, more strategic drivers of key business goals—such as optimizing for efficiency, ensuring supply chain business continuity, meeting core ESG standards, adhering to compliance priorities, and more.
A 2020 study by Forrester Consulting commissioned by DocuSign found that:
- 62% of procurement teams report an inability to search the full text of agreements
- 39% are unable to detect problematic language in contracts before they go live
- About 50% of the firms engaged weren’t even able to find their completed agreements
The data clearly exposed pre-existing problems in the older, manually-based vendor contracting processes. Studies by DocuSign show that with a modern, digitized vendor contracting process, companies like Unilever realized an approximately 86% reduction in average contract processing time.
At the same time, procurement teams are increasingly challenged by more frequent and extensive supply chain disruptions wrought by the likes of global-scale public health and political events: Covid-19, Brexit, the introduction of the GDPR, trade/tariff wars, etc.
A centralized system of agreement for procurement teams
Procurement teams that rely on manual agreement processes can introduce unforeseen costs and errors that could limit the team’s ability to add value. A centralized system of agreement provides contract visibility for every stakeholder, allowing the procurement team to spend less time updating various people about contract status. By providing a central repository for standardized clauses, contract lifecycle management is an easy way to ensure compliance across various agreements and decrease risk.
In addition, contract analytics can help procurement teams negotiate supplier terms and improve performance. Contract analytics powered by artificial intelligence can help reduce cost and risk by increasing access to historical agreements, pinpointing terms that correlate with certain outcomes and highlighting differences between a current agreement and a similar archived version.
Stops revenue leakage: A top-three US telecommunications company analyzed thousands of tower lease agreements and found an opportunity for $100M in cost savings simply due to mismanaged clauses. A top 5 energy corporation reviewed its real estate contract portfolio for risk and found an evergreen lease for an unused facility inherited through an acquisition, resulting in €400K of unnecessary spend.
Accelerates legal/compliance review: A Fortune 100 technology company was able to save $500M in operational costs solely from the adoption of contract risk scorecards. These enabled the company to quickly and thoroughly understand the potential risks inherent to key components in contracts before signing.
Mitigate supply chain risk: A Fortune 100 retailer was able to automatically answer 97% of risk questions by performing AI analysis of 2,000 critical contracts. To perform this same function manually would have cost the company a massive amount of time and money—and may still not have achieved the same level of thorough diligence. By securely storing documents in a cloud-based, centralized repository the company was able to cost-effectively manage risk and adhere to compliance requirements and other regulations.
A centralized, digital platform encapsulating solutions to each of these core issues in the vendor contracting process enables organizations to save time and money, increase visibility and ensure the health of their supply chain.
Introducing the DocuSign Agreement Cloud for Procurement
The DocuSign Agreement Cloud offers procurement teams a centralized digital platform to collaborate, execute, review and store contracts. With it, procurement teams can transform from manually-based vendor contracting processes into an efficient, wholly systemized approach. With it, procurement teams can transform from manually-based vendor contracting processes into an efficient, wholly systemized approach, which can help your team simplify risk management, increase contract visibility and utilize your existing technology through pre-built integrations.
To accomplish these goals for you, DocuSign Agreement Cloud offers a suite of best-in-class digital solutions:
- DocuSign eSignature: With eSignature, your contract signing process is digitized from end-to-end—and works on virtually any device with easy-to-view mobile forms. eSignature reduces the chance of errors and missed fields in vendor contracts.
- DocuSign Insight: Insight provides powerful AI analysis of contracts to help uncover organizational risks, obligations and opportunities. Insight intelligently searches your agreements by concept as well as by keywords, adding purpose-built AI models for critical topics like data privacy.
- DocuSign Analyzer: Analyzer performs fast and accurate analysis of all inbound contracts through insights intelligently derived by AI. With Analyzer, you’ll understand the key components of contracts with an automatic risk scorecard on contract terms, allowing you to negotiate more efficiently and replace high-risk terms with language from a library of pre-approved clauses.
- DocuSign CLM: DocuSign CLM automates the contract lifecycle from end-to-end. Through automated document generation and workflow collaboration and a constantly-updating central agreement repository, procurement professionals can improve visibility into vendor contracts and help your team avoid critical errors.
- Integrations: DocuSign Agreement Cloud embeds smoothly into your company’s existing toolset. Pre-built integrations with common procurement tools such as SAP Ariba and Oracle and much more ensure minimal time to align DocuSign with your procurement tools.
DocuSign Agreement Cloud: The evolution of vendor contracting
The DocuSign Agreement Cloud can accelerate the entire vendor contracting process all the way to the final signing. With DocuSign’s digitized end-to-end solution, procurement teams will significantly benefit from transformative improvements in their workflow.
Learn more about how DocuSign Agreement Cloud for Procurement can bolster your procurement team’s vendor contracting process.