Automating Vendor Agreement Compliance & Detection with Gradient Agent Foundry
Aug 2, 2024
Gradient Team
Overview
In the manufacturing industry, particularly for large agricultural machinery manufacturers, managing vendor agreements is critical for operational efficacy and financial stability. A prominent agricultural machinery manufacturer based in the Midwest, managing several hundred vendor agreements, recognized the need to optimize the way they monitored compliance with these agreements. Partnering with Gradient, the manufacturer was able to leverage Gradient Agent Foundry to develop an AI-powered solution to help streamline this process.
The Challenge
The agricultural machinery manufacturer faced several challenges in managing vendor agreement compliance, stemming from a variety of factors including:
High Volume of Contracts: Managing a large number of vendor agreements can be overwhelming, especially for large manufacturers.
Resource Intensive: Continuous monitoring of vendor compliance requires significant resources and sophisticated systems.
Fragmented and Unstructured Data: Integrating data from various sources (e.g., ERP systems, quality control systems) to monitor compliance can be technically challenging.
With traditional methods, they often detect violations after they have already caused downstream issues (e.g. production delays, quality problems, etc.). However detecting violations is both a time-consuming and a labor-intensive process, especially when data is spread across multiple systems. This leads to a higher probability of errors and impacts the efficiency, cost-effectiveness, and overall operational performance.
The AI-Driven Solution
To address these challenges, the manufacturer partnered with Gradient to automate this process using AI via Gradient’s Agent Foundry. Powered by Hummingbird, Gradient’s domain-specific model in manufacturing, the team developed an AI-powered solution to help drive more efficiency and accuracy.
Automated Validation
The Gradient Agent Foundry provided an AI-powered solution to increase compliance for vendor agreements across the entire lifecycle by proactively comparing each purchase decision against contract terms. Gradient’s solution consistently monitors data from various sources (e.g., supply chain systems, ERP systems, quality control systems) to ensure compliance with vendor agreements, making previously labor-intensive jobs seamless.
Notifications and Reminders
Gradient’s solution proactively notifies the end-user to review or act on flagged violations and discrepancies. These responses can be captured to help inform future recommendations.
Business Rule Capture
Gradient’s solution enabled the team with the ability to configure rules for every incoming purchase order, linked goods receipt, and invoice to ensure compliance with contract terms including minimum order quantity, product quality, on-time payment, credit limits, tariffs, and more. The solution also allows the team to easily extract rules from existing documentation without additional coding required.
The Impact
The deployment of the AI-powered solution had a profound impact on the manufacturer's operations, including:
Improved Detection Accuracy: Gradient was able to reduce the error rate in detecting violations by up to 90%, compared to manual processes which are prone to human error.
Cost Savings: Gradient reduced overall costs associated with manual compliance monitoring and enforcement by up to 70%.
Enhanced Risk Mitigation: Gradient was able to improve risk mitigation by identifying compliance issues by up to 40%.
Conclusion
By leveraging Gradient Agent Foundry to streamline the management of vendor agreement compliance, the manufacturer not only enhanced operational efficiency but also significantly reduced costs and improved risk management. This case study showcases the opportunities and impact that AI can provide manufacturers, especially when it comes to vendor management.