Today, strategic sourcing and contract management play a vital role in the procurement sector. Siloed, these functions can pose risk of spend leakage, impacting an organization’s ROI. By combining sourcing and contract lifecycle management, organizations can unlock a powerful tool to eliminate spend leakage, analyze key terms, gain pain share, and ensure favorable pricing in contracts. SimpliContract’s NextGen AI-powered solution allows seamless integration, plug and play across your source-to-pay tech stack cycle, including P2P and downstream systems. The integration helps to plug spend/revenue leakages, analyze key terms mitigating risks and address several pain points effortlessly driving goals. Let’s delve deep into the topic, know how AI-CLM integration platform can streamline your workflow maximizing ROI.‍

‍_{Why is Integrated Approach to Sourcing and Contract Management the Way to Go?}

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1. Plug Spend Leakages

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Spend leakage, also known as maverick spending, is a significant challenge for enterprises. It refers to the unauthorized or uncontrolled spending that occurs outside of an organization’s official purchasing process. This can happen due to various reasons, such as purchases outside of approved suppliers or contracts, lack of visibility into the spend data, and inefficient contract management practices. According to The Hackett Group study report, an organization loses up to 17% of its annual spend due to leakage. To combat spend leakage effectively, organizations need to streamline sourcing and contract management workflows.  

This is where the need arises for an AI-CLM platform for sourcing and contract management.  SimpliContract’s GenAI-CLM platform allows you to make smarter purchase decisions, flip sourcing events into new contracts and analyze spend more accurately by tightly integrating contracts with your procure-to-pay and source-to-pay suites. It provides a comprehensive view of Contract status from initiation to completion including workflows, collaborations and exceptional approvals.  

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‍2. Gain Insights & Risk Analysis

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An integrated system enables you to analyze key terms in contracts during the sourcing process. By leveraging NextGen AI-enabled contract analytics organizations can quickly identify opportunities for cost savings and risk mitigation in supplier contracts. The AI-enabled analytics enables:

• Metadata, obligation, and clause extraction: Gain visual insights across vendor & customer data, drive control, compliance in downstream PO, invoicing systems.

• Risk Analysis: Amend risk clauses and alleviate risk exposure. Negotiate better terms with suppliers, vendors, upon the renewal.

Moreover, integrating sourcing and contract management enables companies to gain pricing power with suppliers by leveraging their collective buying power across all contractual agreements. With greater visibility into spend data and supplier performance metrics, organizations can negotiate better prices based on actual usage rather than arbitrary price indices set by vendors. This not only leads to cost savings but also ensures fairer pricing for goods and services.

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3. Reviving Contracts

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Another crucial benefit of an integrated system is bringing contracts to life. Too often, contracts are seen as static documents that are filed away after being signed instead of being actively managed throughout their lifecycle. However, with an integrated approach, organizations can use contract management tools to track performance, monitor compliance, and manage renewals and extensions. This helps to ensure that the organization gets the full value out of its contracts and minimizes the risk of spend leakage.

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4. Better ROI

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In addition to eliminating spend leakage, an integrated sourcing and contract management system can help organizations achieve a higher ROI on their procurement investments. By streamlining processes, reducing costs, and ensuring favorable terms in contracts, companies can see significant returns on their procurement efforts. Moreover, with advanced analytics and reporting capabilities, CPOs, CIOs, and CFOs can gain valuable insights into their procurement operations and make data-driven decisions for future sourcing activities.

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_{‍Conclusion}

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An integrated approach to sourcing and contract management is essential for organizations to stay ahead in the market. By leveraging advanced technology and bringing these critical systems together, businesses can eliminate spend leakage, negotiate better prices with suppliers, actively manage contracts throughout their lifecycle, and achieve a higher ROI on their procurement investments.

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Leverage the power of AI-CLM Integration platform and control spend leakages maximizing returns. Contact us for a demo.

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