Artificial intelligence (AI) is revolutionizing business processes, including contract management, a central function of purchasing departments. In procurement, supplier contracts, framework agreements, service level agreements (SLAs), and general terms and conditions of purchase are particularly relevant. These agreements regulate delivery conditions and deadlines, prices, quality requirements, payment terms and compliance aspects.
Manually creating, managing, and analyzing contracts is often time-consuming and error-prone. In purchasing, for example, it is usually necessary to keep track of numerous supplier contracts with extensive conditions. Here, AI can help strengthen the negotiating position, make well-founded decisions, reduce operational costs, and identify and minimize risks early on. AI-supported contract management software automates contract creation, provides intelligent analysis, assesses risks, and ensures compliance with legal regulations, showing companies new ways to make their procurement processes more efficient and secure.
Adhere to compliance requirements
Thanks to its ability to analyze large volumes of text, AI plays a crucial role in contract negotiations and ongoing changes to legal and compliance requirements. With AI check catalogs, contracts can be reviewed for various aspects, such as legally defined knockout criteria or specific clauses. This feature is especially valuable for checking the entire contract portfolio with suppliers for regulatory compliance with new or amended laws, such as the Supply Chain Act (LkSG) or DORA in the financial sector, with just a few clicks. This eliminates the need for manual searches and comparisons of documents. If action is required, the software automatically generates the necessary supplementary agreements using a clause library and initiates the approval and signature processes, including digital signatures. Suppliers are seamlessly integrated into workflows to prevent media disruptions.
Make faster decisions
AI offers various options for quickly obtaining a sound basis for decision-making. These options include generating comprehensible summaries. Depending on the type of document — whether a supplier contract, SLA, or NDA — AI considers the document's specific characteristics when analyzing the text. This allows purchasing managers to quickly understand the most important conditions, even in extensive and complex contracts. The result is shorter processing times, faster decisions, and quicker contract conclusions.
Additionally, AI managers can use the chat function to ask questions about contract content. For example, "What delivery deadlines apply to this contract?" or "What sanctions are provided for late delivery?" The system provides the correct answer, including a reference, in just a few seconds.
Using AI without compromising data security
Although there are already many AI tools available, the security of the data used must always be the top priority. Since contract management involves strictly confidential information, hidden dependencies, unclear data flows, and unauthorized access by third parties must be strictly avoided. To strengthen their digital sovereignty, companies must rely on European providers who securely and legally store and process their data within the EU. Independent certificates, such as the BSI's C5 certificate or the EU Cloud Code of Conduct at Level 3, prove maximum data protection and information security standards are met.
Summary
Artificial intelligence (AI) offers procurement a wide range of practical benefits in contract management. The key to maximizing these benefits lies in using AI strategically: applying it where it can deliver precise results and enable significant efficiency gains. It is essential to consider the entire business process, such as combining AI with digital workflows, to achieve holistic digitalization.
