The Supply Chain Matters blog continues to highlight current signpost examples in the deployment of artificial intelligence, predictive analytics, and other advanced technologies in the evolution toward supply chain digital transformative process capabilities.

As an end-to-end supply chain management blog focused on business process and technology, we field a lot of questions related to viability of machine-learning (ML) and artificial intelligence (AI) or overall digitally based information architecture strategies applied to enhancing various supply chain decision-making processes. Some rightfully question whether this is more vendor hype or whizz-bang technology seeking a solution.  Airbus production line

The short answer is that ML and AI based technology are already being selectively deployed in supply chain management use cases, with meaningful results. The operative term is “select”, where the technology can demonstrate clear value as well as a enabling the broader transformation of overall business processes.

Beyond complex planning and scheduling, one of the other pervasive processes that touch many aspects of today’s more complex global supply chain management is contract management. Contracts are a fundamental fabric of both buy and sell side processes along with the management of contracted services such as manufacturing or maintenance. Contracts provide key information related to business governance, payments, quality, and operational performance, among many other roles. The management, categorization or indexing of all of this important information is time-consuming and ripe for an ML/AI focused approach. Transforming key information to a digital platform opens-up broaden opportunities for integrative decision-making.

Important Announcement

This week, Cloud-based enterprise contract management provider Icertis announced that aerospace designer and manufacturer Airbus had selected its platform to be the source-to-contract technology for its direct sourcing and contracting across Commercial Aircraft, Helicopter, Defence and Space business areas.  Within the announcement, Airbus’s Chief Procurement Officer describes the investment as a means to transform the commercial foundation of the supply chain, which is a much broader perspective beyond procurement itself.

Thus, from our lens, this is a significant announcement from a technology deployment and acceptance perspective.

The notion of highly complex contracts and information readily applies to the aerospace industry. Aircraft components and end products are technologically complex, aircraft itself have operational life spans spanning multiple years of maintenance and the industry is highly regulated due to life safety considerations. The supply chain is primarily driven by engineer-to-order (ETO) or build-to-order (BTO) considerations.  Contracts and the information incorporated within, are therefore the operational lifeblood of business process controls, compliance, governance  and proactive decision-making. Airbus itself works with 12,000 direct, globally-based suppliers and according to the announcement, the ability to easily integrate with existing procurement systems was fundamental to the selection decision.

 

Broader Perspective

Having the opportunity to speak with Samir Bodas, Co-Founder and Chief Executive Officer of Icertis, we further discovered that Airbus indeed has taken a broad perspective to this investment, well beyond that of contracting and procurement.  Bodas characterized contract management as the “5th system of record” in the context of customers, orders, finances and people. In other words, digitized contract management information is another important form of business intelligence.

Consider that processes related multi-tier component sourcing are linked by contract information.  ETO or BTO product configurations are a translation of both sell side and buy side contracting requirements that often are not linked. Important information related to engineering specification, quality, inventory or other needs can often take a lot of time to transfer across multiple organizations not to mention that important milestones can be inadvertently overlooked because of such latency.

That same information translates to added insights as the various existing tiers or exposures of a specific product supply chain. Down the road, digital access to such information opens the door for use of added enabling technology such as blockchain or IoT enabled processes.

Foundational Considerations

The ability to mine contract information leveraging a cognitive contextual approach is an ideal business use case because it opens up such broader opportunities. Consider further that decision-making involves not only transactional related but also archival document related information. However, user adoption and acceptance has to be of prime concern.

Contracts involve many individuals and organizations, and thus any advanced technology applied to contract management must address ease-of-use and quick adoption criteria. Would the technology make day-to-day work easier to accomplish and provide focus to areas that needed the most attention?

If contract information is the 5th system of record, that information needs to be accessed or shared with other operational control systems such as customer relationship management (CRM), procurement and sourcing, quality management, respective supply chain, service management and enterprise ERP systems.

The Technology Provider

Enterprise contract management provider Icertis has its roots in Bellevue Washington and with Microsoft.  The firm was founded and features former Microsoft executives. Its Cloud based platform leverages Microsoft Azure and thus favors native information integration with Microsoft Office. More significantly is the leveraging of Azure’s ML and AI capabilities, which some select supply chain planning or production planning providers are also leveraging in their ongoing enhancements to supply chain planning and scheduling process management needs.

Airbus was not the first significant customer to evaluate and adopt the Icertis technology platform, and notions of contract information as a key  “system of intelligence” supporting broader digital transformative capabilities. Global automotive and truck manufacturer Daimler is a customer as is a number of large equipment, pharmaceutical, drug, chemical and information technology services firms.  Each had a similar challenge in the need to automate the contextual elements of contract information utilizing forms of cognitive analytics, alert teams to detailed risks or dependent relationships or automate obligation tracking and conformance reporting. Each likely had a broader transformative roadmap that considered capabilities beyond just contract management.

 

Reader Takeaways

As noted in a previous blog commentary in this supply chain digital transformation series, when considering the applicability or readiness of artificial intelligence, cognitive or other forms of digital transformative technologies, organizations will always have various levels of process readiness, change management and people skill development perspectives. We continue to reiterate that teams should establish their supply chain capability needs in the context of process and competency needs.

Selection of the most likely technology to enable such goals is derived from an assessment of the capabilities and maturity of targeted technologies. The goal is matching-up both timelines. However, it is equally important to have a transformative strategy and roadmap identified, one that provides cross-functional and cross-business perspectives as to broader opportunities to transform the end-to-end supply chain in decision-making, agility and resilience capabilities.

In the case of ML and AI, this week’s announcement concerning Airbus’s planned adoption of a Cloud-based enterprise contract management platform provides an important reference point. Advanced technology, when developed and configured to address both obvious existing pain points while at the same time cross-functional business wide transformative use cases has value.

For supply chain leadership, the matching of both timelines provides the opportunity for enhanced agility, smarter, more informed decision making and thus competitive advantage.

 

Bob Ferrari

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