Supply Chain Management Contract and Warranty Management Unit III 2024.pptx

Contract Management

1. SUPPLY CHAIN MANAGEMNT Dr.J.Deepak kumar Assistant professor – department of B. C om -BPS Sri Ramakrishna C ollege of Arts & Science UNIT III

2. Dr.J.Deepak kumar Contract Management A contract is defined as – “A written or a spoken agreement, especially one concerning employment, sales, or tenancy that is intended to be enforceable by law”. Contract life cycle management is defined as – “the process of systematically and efficiently managing contract creation, execution and analysis for maximizing operational and financial performance by minimizing risk”. STAGES OF CONTRACT LIFE CYCLE MANAGEMENT Stage 1: Request Stage 2: Authoring and Negotiation Stage 3: Approval Stage 4: Execution Stage 5: Database Stage 6: Record Management Stage 7: Retrieval Stage 8: Reporting Stage 9: Renewal

3. Dr.J.Deepak kumar stages of contract life cycle management

4. Dr.J.Deepak kumar stages of contract life cycle management

5. Dr.J.Deepak kumar stages of contract life cycle management Stage 5 to 7 : Database, Records Management and Retrieval – The next 3 phases – Database, Records Management and Retrieval deal with storage and organization of contracts. Though the phase sounds administrative and transactional, is extremely critical, as what use it would be to anyone, if a signed contract cannot be found easily or lost due to filing or organization anomalies. Stage 8 : Reporting – The Reporting phase provides with a detailed insight on all actions and user defined reports on contracts like, performance, compliance, etc. Stage 9 : Renewal – For an effective renewal, the performance of a contract has been evaluated regularly. The reports generated from the Reporting phase will help to prove performance of the contract and prove effective for renewal. Stage 1 to 4: Request, Authoring, Negotiation, Approval and Execution - The Contract lifecycle management starts with Request for a contract. In the request phase, all stake holders understand the need and commitment requirement. In this phase, the draft of the contract agreement is written. This is just the beginning, as the contract draft will go through many and substantial changes before all stakeholders agree. In the Negotiation phase, the contract draft is reviewed by all stakeholders. The negotiation phase, often is the longest and challenging in the entire contract lifecycle management; this is due to complexity of the requirement, number of stakeholders involved, financial impact, etc. In this stage, all stakeholders – internal and external will review, redline, negotiate, and ultimately approve the contract.

6. Dr.J.Deepak kumar Benefits of Technology and automation in contract management

7. Dr.J.Deepak kumar IMPACT OF TECHNOLOGY AND AUTOMATION IN CONTRACT LIFECYCLE MANAGEMENT Request stage Authoring stage Review and Approval stage Renewal and amendment stage Storage stage Reporting Renewal

8. Dr.J.Deepak kumar IMPACT OF TECHNOLOGY AND AUTOMATION IN CONTRACT LIFECYCLE MANAGEMENT 4. Renewal and amendment stage: The renewal deadline can be set into the system for automatic emails on the various actions that needs to be performed. This takes away the human intervention of manually monitoring the deadlines. 2. Authoring stage: For the authoring, various corresponding contract templates can be used from the repository. The system can pull and mine a lot of information from the request form and a lot of metadata can also be extracted and populated automatically. 3. Review and Approval stage: The review and approval can be routed through the system. The system can generate automatic emails to all stakeholders on the review and approval action as set in the system. The contracts will require signatures during the review and approval process and final signatures. The requirement for signature, will trigger the signature requirement to all stakeholders. Once all the intermediary stages are reviewed/approved and signed the document will be routed for finalization for final approval. 1. Request stage: The manual email or telephonic request, can be replaced through electronic form in the system. The system will route the request to the required associate in the contract team. The system will help govern and monitor the request with all the transparency to all the stakeholders.

9. Dr.J.Deepak kumar IMPACT OF TECHNOLOGY AND AUTOMATION IN CONTRACT LIFECYCLE MANAGEMENT 6. Reporting : The reporting and actions to be performed on a contract as per milestones is an important task. A digitized contract with an intelligent prompter and alerting system will report actions required at each defined milestone. 7. Renewal : Each contract will have an end of life and a renewal requirement. The renewals and re-negotiation are based on supplier’s past performance. Generating customized reports on contracts based on defined and specific criteria would give important insights on supplier’s performance. These insights would set criteria for renewals andre -negotiation. 5. Storage stage : The stage involves that a contract is filed properly, indexed right, organized as per defined rules and most importantly, the users are able to retrieve a contract when needed. Any signed contract will go for a revision and hence will require edits. Retrieving and editing a physically stored contract is a difficult and cumbersome task as compared to when stored on cloud. Cloud storage with appropriate and right security controls and features will allow access to permitted users to the library of contracts. The digitized version of the contract and all the supporting documents, makes it easier for the user to organize, store and retrieve contracts as required and needed .

10. Dr.J.Deepak kumar OUTSOURCING AND OFFSHORING OPPORTUNITIES IN CONTRACT MANAGEMENT The typical retained, outsourcing and offshoring map for the contract management processes is as per the table below. The reason for any process to be retained is due to criticality, complexity, confidentiality, business and financial impact.

11. Dr.J.Deepak kumar ARTIFICIAL INTELLIGENCE (AI) AND CONTRACT LIFECYCLE MANAGEMENT (CLM): Like in any other field, in the field of Contract Lifecycle Management also, Artificial Intelligence (AI), Machine Learning (ML), Robotic Process Automation (RPA), Natural Language Processing (NLP), and Text Analytics is playing an important role to transform contracts and thus improve and bring efficiency and effectiveness in the CLM. AI can impact CLM in following ways: 1. AI and Contract Authoring: A smart AI powered solution did all this for you, that is, on writing the intent of contract, it starts throwing various similar contracts, it systematically lists, all the clauses and sub clauses from a library. Yes, this is possible. Machine Learning (ML) algorithm will make the CLM solution to learn from previously drafted contracts for a subject and through pattern, subject and intent start showing up all previous contracts, from the library list various clauses and sub clauses with appropriate places and also suggest right language and terminology. 2. AI and Contract Data Extraction: Manual data extraction is again a time consuming activity with high risk of errors. Advance Machine Learning (ML) algorithms can help with data extraction with speed and accuracy. AI with NLP, Text Analytics and OCR i.e. Optical Character Reading can help analyze contracts, extract necessary and sufficient information from contracts automatically, create libraries, index and tag contracts, renewal dates and process.

12. Dr.J.Deepak kumar ARTIFICIAL INTELLIGENCE (AI) AND CONTRACT LIFECYCLE MANAGEMENT (CLM): Like in any other field, in the field of Contract Lifecycle Management also, Artificial Intelligence (AI), Machine Learning (ML), Robotic Process Automation (RPA), Natural Language Processing (NLP), and Text Analytics is playing an important role to transform contracts and thus improve and bring efficiency and effectiveness in the CLM. AI can impact CLM in following ways: 3. AI and Contract Risk assessment and Mitigation: With AI NLP, high risk clauses can be marked and can be evaluated for any sub-optimal term, clause or language. It can suggest alternate clauses that can help reduce or mitigate the risk. 4. AI and Contract Negotiations: For negotiations facts, figures, performance dashboards, metrics evaluation are the key. The AI powered analytics user-defined or persona based dashboards can be generated to report service level agreement achievements. This would bring a real time transparency at all levels on the performance, give opportunity to improvise and fix and during negotiations help how the new contract has to termed from price, terms and conditions, etc.

13. Dr.J.Deepak kumar SUPPLY CHAIN AFTER MARKET SERVICES “ Aftermarket " states to a secondary or after sale market for the goods or services that are corresponding or complementary & related to its primary or original market goods (Original Product or equipment). Thus, in several businesses, durable goods are part of the primary market, whereas the non-durable goods or services are part of after-market. Aftermarket goods predominantly include goods and services for replacement, upgrade, maintenance and development of the use of its original.

14. Dr.J.Deepak kumar AFTER MARKET SERVICES PROCESS FLOW

15. Dr.J.Deepak kumar WARRANTY MANAGEMENT – MEANING AND ITS COMPONENTS. Warranty Management had been conventionally viewed by Organizations as a cost of doing business. Annually 4-5 percentage of the Total Sales Revenue is considered to be the cost of warranty management. It is considered as the cost of providing Customer Satisfaction and an opportunity to build Customer relationship. What is Warranty? Warranty is an assurance statement or bond issued by the manufacturer of a product regarding the performance of the goods or services supplied through sale transaction to the customer, for a mentioned period as stated in the Warranty Card accompanying the product. It can be called as a performance guarantee of the goods or services provided by the manufacturer. In case of any technical issues due to the nonperformance of any spare or defect in any part of the product, will be agreed to be considered by the supplier/manufacturer with a replacement of the particular part or repair of the product.

16. Dr.J.Deepak kumar SERVICE PARTS MANAGEMENT AND CLAIMS PROCESSING SYSTEM Service Support Delivery owners act as a primary contact with the customer. To register the service request, the Support Team comprise of Customer Help Desk act as the first level service contact. Technicians and Engineers act as site supports and secondary point contacts to the customers. It will be supervised by the Parts Support Managers and take responsibility to ensure the calls are closed and for delivery performance.

17. Dr.J.Deepak kumar WARRANTY MANAGEMENT AND CLAIMS PROCESSING SYSTEM The complete Business Process workflow has been managed by the E-Commerce based system application that generally consists of the following modules: Logistics Service Management and Supply Chain Management for Parts processes are managed outside the above mentioned workflow system, it will be managed by the Logistics Teams and 3PL service providers. SME Experts A Team of Subject Matter Experts supports the service parts teams. Escalation processes regulate the nature of technical support required to be allocated and timelines for service issue closures. Service Warranty Database (Database of Information as per the Sale of goods or services) Service Ticket Request Registration and Authorization, Ticket closure & Report functions. Procurement request for the Parts and parts issue approval Spares and Parts Inventory Management, Purchase Order Management, Repair Management, Vendor Management etc.

18. Dr.J.Deepak kumar PARTS PROCUREMENT AND LOGISTICS It manages the inbound logistics, procurement of parts, warehousing and distribution on outbound cycle etc. Reverse Logistics functions involve, Parts collection and segregation, management of inventory of defective parts, repairs, warranty replacement with the manufacturer, Re-Exporting the parts, and Disposal of waste or scrapping functions. Based on the Business Governance, Management Structure and Volumes, the parts procurement and logistics handling will be decided to operate under single department or by separate dedicated teams.

19. Dr.J.Deepak kumar REVERSE LOGISTICS Reverse Logistics as the name indicates Planning, Process flow of finished goods inventory, Packaged materials and Parts of finished product return back from the end customer to the company as a sales return or Warranty return or Inventory not sold from the trading partners. Reverse Logistics Planning is made to re-capture the value from the returned materials by way of re-claiming, repairing, refurbishing, recycling etc.

20. Dr.J.Deepak kumar