The potential of AI in contract management is vast.
From assistance with contract drafting by providing suggestions for language and clauses based on previous contracts and legal best practices, through risk identification, comprehensive review, and predictive analysis to supplier performance, the value proposition of what is possible expands each day is expanding every day.
In addition to automating contract reviews and providing better visibility into contract data, AI can even more also be used to automate other routine tasks involved in contract management. For example, such as data entry and document sorting.
Data entry
For data entry, from a technology standpoint, AI-powered contract management solutions can typically use optical character recognition (OCR) to extract data from physical or digital documents, reducing the need for manual data entry. This can save significant time and reduce the risk of errors associated with manual data entry.
Sort & classify documents
AI can also be used to automatically sort and classify documents, such as contracts and invoices, based on their content. This can help organizations to better organize the documents and once again push to improve the efficiency of their contract management processes further.
Renew & terminate contracts
In addition, AI can be used to automate contract renewals and terminations, reducing the need for manual human intervention. For instance, AI can be used to automatically generate renewal notices and termination letters based on contract data and predefined rules.
Identify risks & opportunities
By utilizing ML algorithms, AI can identify potential risks and opportunities, and flag them for contract managers to review. This helps can help organizations identify potential issues before they become major problems.
Predict contract & supplier performance
Predictive analysis is another area where AI can be useful in contract management. By analyzing data from previous contracts and supplier performance, AI can help organizations predict which suppliers are likely to perform well and which contracts are likely to be successful. This may be a great help for Category managers. Finding the right resource to perform the job is often more important than time and pricetag for the deliverable. Imagine the impact this brings to large organizations with thousands of suppliers. This is becoming increasingly important for large organizations having thousands of suppliers in their portfolio.
We need to use AI to augment, rather than replace, our human workforce.
This article is part of our Transforming contract management with AI series. Check out more articles on Risks & Limitations and/or Latest Trends.
