Skip to main content

Supply chain optimization:

Digital contract management for more flexibility and sustainability.

Robin Schmeisser

Created on 28. February 2022

Bahn von oben

The Act on Corporate Due Diligence Obligations in Supply Chains (Lieferkettensorgfaltspflichtengesetz, LkSG) has pushed the issue of sustainability ever more sharply into the focus of corporate decision-makers. The law will come into force in Germany from the beginning of 2023 and will impact Austrian suppliers as well. Corresponding legislation has also been proposed at the EU level. According to a BME survey conducted in 2022, a lack of transparency has left 47% of businesses unaware of the potential for risk in their supply chains with regard to sustainability, human rights, and environmental protection. On top of this come further trends, both exogenous and endogenous – including digitalization and cost pressures – all of which call for a high degree of supply chain resilience.


This blog article outlines how you can use digital contract management to enhance the flexibility of your supply chain and achieve sustainable improvements that will benefit your company’s bottom line.


1. The cloud – a “single source of truth”

Sustainability management calls for a high degree of transparency in the supply chain. That makes efficient, traceable cooperation among the internal and external stakeholders absolutely vital, together with a solid overview of all the agreements.


With a modern contract management tool, you can create secure, password-protected data rooms in the cloud, where you can store and process all your documents centrally in digital files – a “single source of truth.” As a result, you’ll never again have to deal with differing versions of the same document, time-consuming searches in local drives, and confusing file systems. The role-based authorization framework means that only a limited circle of people can access sensitive data – whenever and from wherever they are, using any standard end device. What’s more, with end-to-end documentation of every modification and revision-secure archiving in the cloud, your company satisfies its legal obligation to provide proof of compliance. Another major benefit is just how easy it is to integrate new business partners, including team members, vendors and suppliers, legal counsel, and regulatory agencies, who can then begin interacting with each other right away.


2. AI-powered collaboration with suppliers – without switching between systems

Alongside cloud services, leveraging artificial intelligence (AI) in digital contract management also supports seamless and transparent cooperation among the business partners in the supply chain.


AI recognizes and classifies metadata such as contractors, contract amounts, and terms, enabling the system to retrieve information from digital files in an instant. Clearly structured lists for filtering and sorting, combined with optical character recognition (OCR) and an intelligent semantic full-text search, make it all possible: The application scours the entire archive to deliver the right results just as soon as you begin typing in keywords. Smart contract management is designed to identify the relevant agreements swiftly and respond to questions about suppliers in a matter of seconds. When action is required, each to-do is displayed both in the personal worklist and as an e-mail reminder. Designated deputies handle tasks when a party is absent, eliminating delays before they occur. The result is collaboration that is straightforward and transparent.


3. Templates ensure speedy contract drafting and enhanced quality

When you need to adapt existing agreements to comply with new or changing legal requirements, two key fundamentals must be in place: access to a clear, customizable tabular display of all the contracts or suppliers for one, along with cooperation arrangements that are highly organized and traceable. With modern contract management software, that’s no problem at all.


The relevant persons have continuous access to the most recent contract templates, all of which have been approved by the legal department. Using text modules and clause libraries, centrally stored metadata is transferred directly from the digital files to the document templates, speeding up the contract generation and amendment processes while boosting quality. As a result, legal requirements can be implemented swiftly and on time, ensuring that there are no violations to any regulations along the supply chain.


4. Maximum efficiency thanks to process automation and digital signatures

Once an agreement has been generated or adapted, the system initiates the required review, approval, and release workflows automatically, using a rule-based approach to route them to the relevant decision-makers in the supply chain.


Every intelligent contract management product also features integrated, legally compliant advanced electronic signature capabilities in accordance with the EU’s eIDAS Regulation. The automatically initiated signature process takes place without involving third-party providers or forcing the user to switch to a different system, accelerating workflows dramatically. Time-consuming informal processes, ambiguities surrounding document validity, and unreliable data exchange are eliminated across the board. This leads to sustainably efficient, revision-secure processes from the beginning to the end of the contract lifecycle, and to maximum transparency with regard to version and status.


5. Targeted deadline compliance thanks to integrated deadline management

Automated deadline management is yet another critical feature of modern digital contract management – one that brings lasting improvements to workflows and stakeholder interaction in the supply chain.


AI extracts deadlines and dates from the scanned agreements and presents them in structured lists. Sorted according to contractual end dates, they provide an overview of impending events. On top of that, the system’s own calendar, linked to Microsoft Outlook, helps users keep track of all appointments and deadlines. Email reminders and push notifications alert those responsible in good time about upcoming deadlines. This eliminates error-prone manual entries and time-consuming appointment scheduling by e-mail or phone. You’ll never miss a deadline or overlook a contractual commitment again, avoiding potentially hefty penalties.


Digitalization drives flexible, sustainable supply chains

Today, supply chain sustainability is more relevant than ever before. Companies seeking to generate a competitive edge would be well advised to begin by making their supply chain management more transparent and more flexible. Cloud-based, smart standard software such as Fabasoft Contracts offers exactly this kind of support thanks to its clearly structured display and straightforward, traceable, and secure collaboration. As a result, companies can implement the legal due diligence requirements imposed by the LkSG with ease and – by automating processes wherever possible – minimize both costs and risks on a lasting basis.