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Supply Chain

Identifying Risk and Preventing Disaster From Supply Chain Disruption

With disruption as the new normal, smart companies are looking to strengthen their existing procurement and delivery agreements wherever possible, and ensure their new contracts are written to anticipate and mitigate supply chain issues.

Examining contracts to mitigate disruption 

Many contract managers and procurement specialists are taking a magnifying glass to their agreements in a way they haven’t before:

  1. With gas prices at times up nearly 50% year-over-year, companies are running risk analyses to gauge their exposure to increased transportation costs.
  2. In light of the Suez Canal Accident that paralyzed global shipping, companies are reviewing and updating the Force Majeure clauses in their supply contracts.
  3. After seeing manufacturing cycles severely disrupted for months by the ongoing global microchip shortage and other factors, companies are reviewing the “freight not accepted” language in their agreements to determine which party is on the hook for storing components that are awaiting final assembly.

While these specific examples of supply chain disruption will resolve over time, they highlight a persistent issue – many supply chain contracts are simply not written to handle the extreme volatility and risk of today’s fragile and interconnected global system. In some cases, companies are using contracts and clauses that have remained static for multiple years, just copied and pasted from one agreement to the next, with little need to alter them – until now.

Contract review can be laborious and time-consuming

But getting a handle on hundreds or even thousands of complex contracts with a myriad of supply chain partners is a massive undertaking. Business professionals have to take time away from critical responsibilities to pore through lengthy documents and manually extract the relevant information for later analysis. It’s difficult, time-consuming, error-prone work, and extremely expensive in terms of both dollars and time. It’s no wonder these agreements have remained static for as long as they have.

In recent years, some contract lifecycle management (CLM) and intelligent document processing (IDP) vendors have begun offering limited data extraction for specific properties. While these services can be helpful, they usually fall short of the precision and customizability needed for nuanced and detailed tasks.

More recently, consulting firms specializing in supply chain and logistics have started sprouting up, offering to outsource contract analysis and data extraction, often with the help of technology. While this solution sounds good, the work is usually still done manually, remaining expensive and error-prone as a result.

Download your guide to AI for managing supply chain disruption

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The promise of Artificial Intelligence assistance  

Where these other solutions fall short, AI has shown the most potential to pick up the slack. AI has taken a long journey since it was first introduced, with some tools showing more promise than others. Unfortunately, many of the tools that have made it to market have offered the world and delivered a pebble.

That said, some software companies have led the charge in advancing AI to the point where now it can be utilized to effectively eliminate the remedial effort of analyzing contracts and other documents.

Docugami is one such software company that is transforming the way data and documents are processed. Docugami utilizes the most advanced AI, machine learning, and natural language processing to deliver on the promise of document understanding. It can create an XML representation of an entire set of supply chain contracts in 90 minutes, effectively turning written words that humans understand into a semantic .XML tree of information that computers can understand.

Supply chain professionals are utilizing this technology to update contract clauses, identify risks, and, equally importantly, to create a healthy work-life balance by managing vendors more effectively.

Never be left in the dark on your company’s agreements again.


Learn how Docugami’s breakthrough AI delivers value on Day One, unlocking critical business information from your documents.




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