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's data platform to help transform the data in a way that can be used to help streamline this process.
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: In order to ensure vendor forms met their compliance standards, vendors would need to manually sift and verify all of the information. Not only is this time-consuming, but it can lead to problematic mistakes due to the high volume of contracts and how forms are interpreted.
Fragmented and Unstructured Data: Integrating data from various sources (e.g., ERP systems, quality control systems) and formats (e.g PDFs, printed forms, etc.) 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 Gradient's data platform.
Automated Validation
Using Gradient, the team was able to increase compliance for vendor agreements across the entire lifecycle by proactively comparing each purchase decision against contract terms. To do this, the team first automated the process by extracting necessary information from the unstructured data. Once extracted, the system compares the data across 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%.