How to protect your railroad from pricing surges with AI-powered
Market prices within the larger supply chain are no stranger to change. Given fluctuations in supply and demand, or the cost of goods or services sold, prices may rise or fall to the benefit (or not) of rail carriers.
Some of these factors are out of a carrier’s control. That includes changes in interchange rates, interline agreements, fuel costs, or taxation. Given that these parameters affecting price are external—what can a railroad do to safeguard the business?
The relationship between contracts and prices
For commercial departments (which can include finance, sales, and marketing), there is a strong ask for the ability to track and respond to changes in external factors and reflect those updates in ones contracts, whether that’s a switching allowance or a volume guarantee. These sort of price or revenue-associated changes can directly impact your business revenue if they aren’t captured in your contractual agreements.
On the one hand, peering into the distance to get visibility into these factors is challenging on its own. It requires constant awareness of the market, assessment of the impact of any given factor and the risk involved, possible obligations that would need be to assessed, and effectiveness in the current contractual agremeents from the point of view of the carrier.
With that being said, the railroad industry is poised to experience a shift, or transformation, in the way that contracts are handled and managed.
What are the asks?
The need for an intelligent contract management system is extensive, as railroads face a growing sense of urgency to gain extended visuals on certain factors like efficiency, risks involved, possible obligations, and effectiveness in contract management processes. This ask reflects a growing trend across the organization for adoption of contract intelligence. 85% of respondents in a survey by ContractPodAi believe that AI-based contract management software has a range of benefits, including language or term consistency used in contract creation, to freeing up resources to focus on doing more strategic work.
With a digital contract management system, management teams get access to an automated experience that facilitates configurable proposal rules and templates, a user-accessible contract wizard, and AI-inflused contract intelligence that offers deep data visualization capabilities.
Digitalization of contract management in the rail sector
For the rail industry, contract management processes aren’t contemporary. Rather the practice has been around for ages. What’s different today from yesterday is the ability of digital contract management tools that add intelligence and automation to the contracting process, configures rules and templates to incorporate into contracts, and allow for user-defined roles. Applications of technology like cloud storage and AI-infused contract risk assessment is cost-effectively impacting the organization.
Increasing contract volumes and a digitalizing world is making clear the need for an intelligent contract management software or system, turning a great-to-have into a must-have. Cloud technology’s arrival on the scene has made this more cost-effective, accessible, and secure, giving teams access to contracts in the cloud for retrieval, performance analysis, and integration with all your external systems.
Protecting for the future
Contract management solutions built on the cloud also ensure safety against uncertain risks that could arise in the future. As a result, centralized contract management helps in responding to market changes effectively, including inflation in sales and marketing due to fluctuation of rates or changes in regulatory requirements.
Solutions like CloudMoyo Rail Contract Management (CRCM) give you enhanced visuals off financial factors such as interchange rates, hiring costs, freight audits, and tax changes. So it’s no surprise that the utilization of a contract management system has proved to be profitable.
Some other benefits of AI-powered contract management as identified by leading contract lifecycle management provider, Icertis:
- Reduce the contract cycle and eliminate errors by automating key parts of the contract review process
- Process third-party contract faster
- Reduce risk and improve contract performance
- Help you negotiate the best terms possible and outcomes for your business
- Ensure compliance with all terms and clauses
Make smarter decisions by identifying the relationships between common entitites hiddin in contract data
Major needs of the system
Bringing automation, integration, and AI into your contract management system, you gain control to manage risks and obligations individually for every contract. A solution like CRCM gives you enhanced visuals on financial factors such as interchange rates, hiring costs, freight audits, and tax changes. With average rail rates almost 43% lower today than in 1981, the need to price competitively but also profitabily without compromises to business revenue is key (source: AAR). This is why contract intelligence is they way forward.
Two other must-have features we recommend you have in your contract management system:
- Risk assessment in situations of contract modification
Digital contract management systems provide increased visibility into various contract-related processes. There should be a pre-defined set of instruction to follow should there be any changes or modifictations to contracts that can could make a contract non-compliant.
- Integration with commercial factors
API-friendly architecute is critical so that your system can integrate with business systems like pricing masters, ERP, revenue management, and interline settlement software. With this functionality, you can maintain pre-approved lists of commercial changes that are involved with a contract, such as the standard products, services, and a variety of prices included within the industry (i.e fuel and materials). When your contract management system integrates with other systems tracking changes in these factors, changes can be incorporate in real-time into contracts.
CloudMoyo Rail Contract Management (CRCM)
CRCM helps railroads not only digitalize contracting from creation to post-signing, but also accelerates ROI and profitability from your contracts. AI-powered risk assessment capabilities track various scenarios and help you not only more easily manage contracts, but also safeguard your business.
With CRCM, we bring together domain expertise to tailor a solution for the rail industry. How can we help you transform contract management for the long haul? Drop us a note here to talk with our team about contract management digitalization opportunities for your railroad.
Opportunities for digitalization in railroad contract management
Date: Tuesday, December 8, 2020 | Time: 10 am PST
CloudMoyo empowers rail and transportation companies to gain greater insights, unlock efficiencies, and improve agility in operations, revenue and asset management as well as critical areas of safety, crew scheduling and maintenance. Combined with deep rail industry expertise, our cloud-based, AI-driven solutions leverage cutting edge technology to reimagine railroad digitization.
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