Airbus and Daimler are both global enterprises that manufacture iconic products—with massive portfolios of global suppliers to match.
They are also both completely rethinking how they manage their relationships with these suppliers by putting contracts at the center of the sourcing process.
Last week, Airbus announced that it has chosen Icertis to spearhead a digital transformation of their source-to-contract process. The global aerospace leader will use the Icertis Contract Management (ICM) platform and ICM Sourcing application for direct procurement contracts across its Commercial Aircraft, Helicopters, Defence and Space Divisions.
Airbus' selection of Icertis follows Daimler's successful rollout of ICM and the Sourcing app, helping streamline Daimler's relationships with 500,000 suppliers.
Daimler and Airbus are at the forefront of a paradigm shift in sourcing, in which buyers use digital contracts housed on a cloud-based contract management platform as the core of their sourcing lifecycle processes, from RFxs to performance analytics. In doing so, the companies are able to leverage artificial intelligence and machine learning (AI/ML) to extract maximum value from their sourcing contracts.
Digitization is turning contracts from static documents to strategic assets and AI is bringing them to life, so they can interact with humans, surrounding business systems and, ultimately, even other contracts.
Why They're Focusing on Contracts
For too long, contracts have been left for last during the sourcing process, which slows down the buying process and creates leakage when negotiated terms are not included in the final contract.
Ulrich Ochmann, product owner of contracting for Daimler's New Procurement System (NPS), recently explained Daimler's approach to bringing contracts to the center of the sourcing process.
"In an ideal state, we wanted sourcing and contracting to go hand in hand, because in procurement you start with sourcing but immediately you also start your first contracts," Ochmann said. "And when this is joined in one powerful tool, you have everything transparent."
Similarly, Airbus will use ICM to bring contracts to the center of the sourcing process to digitally optimize vendor relationships, accelerate commercial negotiations, and increase compliance.
"As Airbus strives to create a better connected, safer and more prosperous world, we needed a transformative approach to contracting that accelerates business velocity while improving compliance," said Klaus Richter, Chief Procurement Officer at Airbus. "The ICM platform and ICM Sourcing application will allow us to digitally transform our commercial foundation in the supply chain, ensuring best-in-class supplier evaluation, selection, contracting and collaboration – all while reducing supply chain risk."
For Airbus and Daimler, increasing strategic agility through digitization starts with optimizing commercial relationships. Bringing contracts to the center of the process enables this transformation by enabling businesses to connect their market opportunities with their supply chain more effectively – bridging one of the largest enterprise gaps of the digital age.
How It Works
So what does bringing contracts to the center of sourcing with ICM look like?
First, it's easy to deploy.
Icertis' cloud-first, API-first, integration-first architecture allows for rapid, enterprise-wide deployment and integration with other procurement systems. At Daimler, ICM was operational within four months, a record for enterprise-wide implementation at the company.
Second, it's intelligent.
The ICM Sourcing app, which was built specifically for sourcing organizations, allows users to get full visibility into suppliers' risk profiles and ensure compliance throughout the procurement process.
Icertis' AI-infused platform enables users to make better decisions during procurement negotiations – first by recommending optimal contract language based on best practices from other related contracts and secondly, by surfacing historical performance data from suppliers, allowing businesses to avoid unnecessary risks during selection and contracting.
And users can perform side-by-side analysis of bids or proposals and score them with both qualitative and quantitative criteria.
Lastly, it is enterprise-wide.
Because all this is managed on a single, enterprise-wide platform, buyers can quickly get a complete understanding of their relationship with suppliers including current and past contracts, historical performance and complete risk profile for a unified view for sourcing events.
If you're interested in learning more about the benefits of contract-centric sourcing and how AI is transforming procurement, download this special report from ProcureCon today.