Enhancing sourcing’s value through inte-grated contract data management
Mäkinen, Arto (2024)
2024
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2024060521111
https://urn.fi/URN:NBN:fi:amk-2024060521111
Tiivistelmä
Abstract
Contracts play a critical role in the value chain, representing the objectives, rights, and obligations of parties involved. In nutshell contracts determine the business value for the contracting parties. They also help manage the increasing compliance requirements set by regulators worldwide. Contract management has been gaining importance within the past ten fifteen year as a new discipline within enter-prise process regimes among financial and accounting, project management and service management. Organizations often struggle to fully utilize the value of their contracts. While advanced contract management systems with artificial intelligence exist, success rate on implementing such systems varies greatly. Studies show that there is often a lack of a dedicated sponsor for contract management within enterprises. Additionally, contract data is typically handled in multiple systems and processes, leading to inefficiencies and errors. The objective of the case study was to improve the sourcing’ efficiency within the case company by developing inte-grated contract management and contract data management. Sustainability and privacy management were selected as pilot process areas. Utilizing agile methodologies an integrated process description was described for the sourcing domain. Then based on the process model and existing policies, rules and standards conceptual data model was de-fined for source to contract and purchase to pay areas. Once the process and conceptual data model were ready a detailed logical data model for supplier contract was developed in addition with attribute and their value definitions. The results of the case study abled immediate improvement in connecting contract data to purchase to pay process and with that gain improvement in cashflow. The new data model also facilitated creation of comprehensive supplier dashboard, which provides wide view for supplier and sourcing managers to supplier contracts, performance, compli-ance, and risks. The results also provide basis for defining a new system landscape, which will enable implementation of more extensive automation into source to contract and purchase to pay areas. The agile method proved to be very effective for parallel development of processes and data modeling. While sustain-ability and privacy management were used as pilot processes, this approach can be applied to any enterprise process area. The method and new data model also opens up new opportunities to explore relationships of sourcing contracts to for example product data management or to customer contracting.
Contracts play a critical role in the value chain, representing the objectives, rights, and obligations of parties involved. In nutshell contracts determine the business value for the contracting parties. They also help manage the increasing compliance requirements set by regulators worldwide. Contract management has been gaining importance within the past ten fifteen year as a new discipline within enter-prise process regimes among financial and accounting, project management and service management. Organizations often struggle to fully utilize the value of their contracts. While advanced contract management systems with artificial intelligence exist, success rate on implementing such systems varies greatly. Studies show that there is often a lack of a dedicated sponsor for contract management within enterprises. Additionally, contract data is typically handled in multiple systems and processes, leading to inefficiencies and errors. The objective of the case study was to improve the sourcing’ efficiency within the case company by developing inte-grated contract management and contract data management. Sustainability and privacy management were selected as pilot process areas. Utilizing agile methodologies an integrated process description was described for the sourcing domain. Then based on the process model and existing policies, rules and standards conceptual data model was de-fined for source to contract and purchase to pay areas. Once the process and conceptual data model were ready a detailed logical data model for supplier contract was developed in addition with attribute and their value definitions. The results of the case study abled immediate improvement in connecting contract data to purchase to pay process and with that gain improvement in cashflow. The new data model also facilitated creation of comprehensive supplier dashboard, which provides wide view for supplier and sourcing managers to supplier contracts, performance, compli-ance, and risks. The results also provide basis for defining a new system landscape, which will enable implementation of more extensive automation into source to contract and purchase to pay areas. The agile method proved to be very effective for parallel development of processes and data modeling. While sustain-ability and privacy management were used as pilot processes, this approach can be applied to any enterprise process area. The method and new data model also opens up new opportunities to explore relationships of sourcing contracts to for example product data management or to customer contracting.