Today's harsh business environment presents constant challenges, including the critical task of optimizing and speeding up sourcing processes. Businesses often struggle with manual, error-prone sourcing methods that are buried in emails and lack transparency, leading to frustration, uncertainty, and time wastage.
In your sourcing automation journey, you've selected and implemented the right tools to combat inefficiencies. You've established supplier portals for faster communication and collaboration with suppliers. You've implemented robust RFx and onboarding response approval workflows, aiming to bring governance into the process and reduce bottlenecks. Parallel reviews of RFx and onboarding response workflows have been put in place, hoping to expedite the review process across procurement, legal, finance, and IT. You have achieved efficiency gains, but as you look around, you realize that there is clearly room to unlock doors to achieve greater optimization and efficiency gains.
Despite your best efforts, you find yourself lagging behind the competition, painfully aware of opportunities lost due to elongated sourcing cycles. Your supplier relationships are strained, especially in the early stages of engagement, putting a dent in your negotiation power and impacting your bottom line. Optimization of bids remains a daunting task, and long contract negotiation cycles on key terms and provisions add to your burden. It's a glaring reminder that there's a missing piece in your sourcing automation puzzle. And that piece is the combination of AI and enablers that deliver a connected experience across the Source-to-Contract process.
Powering Sourcing Automation with AI for Efficient Operations and Successful Outcomes
AI for sourcing may not currently be part of your arsenal, however, its potential to transform the landscape is worth exploring.
A report by Deloitte highlighted that businesses utilizing AI in their sourcing process could increase efficiency by 45%. What is the lifeboat that rescues these businesses from the tumultuous waves of inefficiency and steep costs?
AI-enabled Autonomous Sourcing
AI-enabled autonomous sourcing merges artificial intelligence (AI) with procurement, automating and enhancing sourcing processes with predictive analytics, machine learning, and more to boost efficiency, precision, and adaptability to market shifts. By automating routine tasks like supplier discovery and evaluation, it saves time and allows procurement teams to focus on strategic actions. AI can also mitigate supply chain risks and improve decision-making through data-driven insights, promising a future where sourcing continuously evolves for optimal procurement performance.
AI-enabled Automatic Assembly of RFP & Supplier Selection
AI-enabled automatic assembly of RFPs drastically simplifies the creation process. It uses a database of historical RFP data, industry trends, and specific project requirements to tailor each RFP. The AI continually improves its efficacy and precision with every new iteration, refining its output over time. When choosing suppliers, AI evaluates a multitude of criteria including cost-effectiveness, reliability, promptness of delivery, and quality of products or services. The AI's machine learning algorithms refine their predictions with each interaction, improving the accuracy of supplier selection for every specific project. This automation greatly accelerates the procurement process, minimizes the risk of human error, and optimizes the quality and value derived from the supplier selection process.
AI-enabled Sourcing and Bid Optimization
In an increasingly competitive marketplace, efficient sourcing and bid optimization are key strategic elements within the supply chain. They are centered around a comprehensive evaluation and procurement of services or goods from suppliers who provide the best balance of cost and quality.
Sourcing optimization uses advanced technology and data analytics to discern the most effective sourcing routes. It balances multiple elements, such as cost, supplier credibility, delivery timelines, and quality, enabling businesses to make data-driven decisions. This approach reduces expenses and risks while enhancing the overall performance of the supply chain. Furthermore, it enables the processing of complicated sourcing situations that may be beyond the capabilities of conventional methods.
Bid optimization is another crucial process where businesses can achieve the best value from suppliers during the bidding process. It creates a fair and transparent competitive space for suppliers, allowing the businesses to benefit from the best possible proposals. The utilization of machine learning algorithms and advanced analytics supports prediction of supplier behaviors, evaluation of bid competitiveness, and forecasting of market trends, all of which are essential for accepting the most beneficial bids.
Incorporating artificial intelligence (AI) in sourcing and bid optimization paves the way for a dynamic and efficient supply chain that optimizes value, minimizes costs and mitigates supplier risks. AI aids in responding swiftly to changes in the market, ensuring businesses remain at the cutting edge of their industry.
However, to achieve effective sourcing and bid optimization, a combination of sophisticated technology, proficient personnel, and strategic decision-making is required. AI becomes a crucial part of this mix, helping to refine these processes and make them more efficient and profitable.
Unleashing the Power of a Connected Contract Management Experience
A unified Source-To-Contract journey provides a holistic approach to sourcing and related procedures like vendor integration and contract administration. By fluently linking data, operations, and insights across these areas, particularly on a single data model platform, there is a remarkable potential for enhanced efficiency and previously unnoticed opportunities for cost and risk reduction. Let's look into some prime examples of facilitators that can generate exceptional outcomes with a connected Contract Management Experience.
AI-powered NDA Generation in RFx Management
NDA generation in RFx management serves to protect the proprietary information and data of all parties involved during the bidding process. With artificial intelligence and automated connectivity with contract management clause libraries and templates, generating NDAs can become easier and more efficient. These technologies can swiftly draft NDAs with clauses tailored to specific RFx processes, ensuring that sensitive information shared during the RFx process remains confidential. Automating this process not only saves time but also reduces the risk of human error in crafting these legally binding documents.
Vendor Performance Insights During RFx Cycles
Evaluating suppliers, particularly factoring in their past performance, can be a demanding task. Performance-based evaluation allows organizations to consider suppliers' past performance and KPIs from previous contracts during the evaluation process. This can be made possible with a connected experience between sourcing, contract management, and contract obligation management solutions. It expedites the evaluation cycle and contributes to more informed award decisions.
After awarding contracts based on performance evaluations, continuous monitoring of contract obligations comes into play. It involves tracking vendor performance throughout the contract term to ensure they continue to meet the agreed-upon standards and expectations. Real-time insights gathered from continuous performance obligation monitoring can be fed back into the evaluation process for future RFx’s, creating a feedback loop that continually improves the accuracy and effectiveness of supplier evaluations.
Such performance-driven insights become even more powerful and effective when augmented with AI, and don’t need to be limited to direct historical performance of the same suppliers being evaluated. Insights from performance of similar suppliers in the same buying category and geography can be hugely beneficial to sourcing managers while requesting information and evaluating other suppliers in the same category and geography.
Parallel Onboarding and Contract Initiation in Sourcing Events
A connected experience between sourcing and contract management enables initiation of contracts with suppliers at any stage of the sourcing cycle using company templates. This parallel contracting approach provides contract managers with enhanced visibility, fosters early commitment from suppliers through soft buy-ins, and can significantly reduce the overall source-to-contract cycle times. A connected experience can also deliver meaningful insights and risks to the contract management team and ensure that risk provisions and mitigation obligations are included in the contract.
Similarly, automation of a connected experience between strategic sourcing management and vendor onboarding can facilitate parallel execution of the onboarding process and associated supplier due diligence, leading to shortened source-to-contract cycle times. Sharing of supplier information becomes easier if processes are connected and avoids duplication of the same supplier information that is needed for both onboarding and proposal evaluation.
Connected Pricing, Milestones, and other Terms
Managing pricing, delivery and quality milestones, and other key terms in a unified manner significantly enhances the efficiency and effectiveness of the sourcing process. Pricing is a critical factor in sourcing decisions. It needs to be managed carefully to ensure cost-effectiveness without compromising on quality. Modern sourcing platforms provide features for automated price comparison across suppliers.
A connected experience with contract management can provide RFx price comparison against historical contracts with the same and other like suppliers. This can drastically reduce manual labor and minimize human errors while providing sourcing teams with maximized negotiation leverage. By using AI coupled with this connected data and market trends, these solutions can also help predict future pricing trends and price floors that the supplier will be willing to negotiate up to, enabling more strategic and informed decision-making.
Achieving an alignment of costs and terms between sourcing and contract managers is often a challenging feat. With a connected solution, pricing arrangements, discounts, payment terms, and key deliverable milestones from sourcing events can be directly made available to the contracting process. This integration ensures that commitments made during the RFx stage are honored, thereby avoiding duplication of negotiation efforts and fostering transparency and acceleration of the contracting cycle. A connected experience between RFx and contract management also provides complete visibility of supplier RFx responses and reduces manual back and forth between sourcing and contracting teams.
Clause Library Integration in RFx Management
The contracting phase in the supplier engagement process, particularly the negotiation stage, can become prolonged due to extended discussions and deliberations. Two processes - integration of a clause library and streamlined contract management - can bring about significant efficiency and speed.
The incorporation of a pre-approved contract clause library into RFx questionnaires changes the game. This library, filled with standardized, legally approved clauses, expedites the contracting process and can drastically reduce the need for extensive negotiations during the contracting phase. Suppliers, eager to secure your business, are more likely to agree to these pre-approved terms during the RFx stage. Upon award, the agreed upon contract clauses during the RFx cycle can be seamlessly passed into the contract generation process and accelerate the contract authoring process. Overall, this connected experience not only shortens the sourcing cycle but also reduces potential legal risks, leading to more effective and profitable sourcing outcomes.
Maximizing Efficiency and ROI with Pre-Configured Connected Workflows on the ServiceNow Platform
As illustrated in the above examples, connecting data, processes, and insights across applications and solutions can unlock limitless opportunities for boosting productivity, and reducing costs and risk.
Aavenir enables enterprises elevate sourcing and contract management efficiency and ROI to unprecedented levels with the above illustrated pre-configured connected workflows across its sourcing, onboarding, and contract management applications on the ServiceNow platform.
Aavenir’s Connected Contract Management experience also complements several ServiceNow solutions with pre-configured connectivity. Connectivity from Aavenir’s solutions into ServiceNow Source-to-Pay streamlines the initiation of sourcing events in Aavenir RFPflow from procurement requests and cases in ServiceNow Source-To-Pay, while pre-configured connectivity from Aavenir Contractflow into ServiceNow Source-To-Pay and Legal Services Delivery provide procurement and legal operations managers with seamless contract initiation and generation, as well as centralized access to contracts from ServiceNow’s supplier manager, vendor manager, and legal services workspaces. Centralized visibility into SLA performance and GRC recommended risk mitigation from ServiceNow’s ITSM and GRC solutions is made available at the contract level in Aavenir Contractflow with pre-configured connectivity that Aavenir offers.
Aavenir's Connected Contract Management Experience on ServiceNow eliminates the need for costly technical integrations. Built on the ServiceNow platform, Aavenir’s applications share the same single data model as other ServiceNow applications, thereby providing faster time to value for our customers looking to achieve the benefits outlined above.
Champion Petfoods Customer Success Story: From Chaos to Streamlined, Accelerated Sourcing
Champion Petfoods was once burdened by manual sourcing. With Aavenir's AI solution on the ServiceNow platform, they transformed their sourcing cycle, reducing manual email management, supplier response consolidation, and visibility issues. Their process improved by 80% in setting up RFQs and faster consolidation.
ServiceNow, when combined with Aavenir RFPflow, delivers a powerful platform for seamless sourcing and contracting. It offers centralized portals, integrated workflows, collaborative messaging, and document sharing - a comprehensive suite with AI and automation to tackle business challenges efficiently.
Their success story sheds light on the potential for improved sourcing cycles and processes. Embrace digitalization and automation, learn from their journey, and steer towards operational efficiency. The path might be challenging, but with the right tools, triumph is attainable.
