Supply chain contracts are costing your company millions in inefficiencies.

According to research from Gartner, inefficient processes in procurement and supply chain management continue to be a major obstacle for operational success. Yet most companies continue treating contracts as legal documents rather than what they truly are: business processes.

As the CEO of a contract management platform serving 1,500+ companies, I’ve witnessed firsthand how this fundamental misconception creates supply chain bottlenecks. The good news?

A major shift is transforming how supply chains operate: CFOs—not lawyers—now control contract management.

The Costly Reality of Contract Inefficiency

If you’re treating contracts as legal documents rather than business processes, you’re likely facing significant inefficiencies. According to McKinsey & Company, organizations that fail to digitize their supply chain processes face up to 30% higher operational costs compared to digital leaders.

The World Economic Forum reports that AI is “rapidly reshaping the role of chief financial officers (CFOs), offering unprecedented opportunities in automation, data analytics and risk management.”

The supply chain industry is undergoing a significant transformation, driven by the realization that contracts are at the center of business operations. As I often tell our customers, “A contract is not a legal document. A contract is a business process. It’s actually the most central business process in a company.”

Why CFOs—Not Legal—Now Control Supply Chain Contracts

During the past five years, we’ve witnessed a massive shift in who manages contracts. Fifteen years ago, contracts were exclusively the legal team’s domain. Today, that’s no longer the case.

In our work with hundreds of mid-market companies, I’ve observed that about 65 to 70% of our customers don’t have a legal team anymore. Most have outsourced their legal function entirely, with at most a single paralegal handling day-to-day matters.

This transformation has been accelerated by two factors:

1. Contract templates have become standardized: More than 90% of the contracts signed on our platform have zero negotiation. They’re template-based and processed without legal intervention.
2. AI technology has eliminated the need for initial legal review: AI can flag potential issues without human intervention, making legal review unnecessary for routine contracts.

The result? Finance and operations leaders now manage supplier contracts, focusing on business efficiency rather than legal nuance. According to Deloitte’s CFO Signals report, financial leaders are increasingly responsible for digitizing core business operations, including contract management.

Three Critical Supply Chain Bottlenecks Solved by Modern Contract Management

For supply chain professionals, three critical bottlenecks can be eliminated with modern contract management software:

1. Accelerated Supplier Onboarding

The traditional method of onboarding new suppliers involves multiple email exchanges, document revisions, and time-consuming approvals. This process frequently stretches from days to weeks.

MIT Sloan Management Review notes that lengthy supplier onboarding is one of the top friction points in modern supply chains. Companies that have implemented AI-powered automation report reducing their supplier onboarding time by up to 80%.

With contract lifecycle management software, the entire process—from initial request to contract execution—can be reduced to hours rather than weeks.

2. Real-Time Financial Visibility

For CFOs, one of the biggest challenges in supply chain management is getting accurate, real-time visibility into financial commitments.

The Harvard Business Review has documented how advanced analytics and automation are transforming financial operations in supply chain management, allowing for more accurate forecasting and reduced risk.

Modern contract management technologies extract all financial obligations automatically, allowing finance teams to:

• Create accurate cash flow forecasts based on actual contractual commitments
• Identify opportunities for consolidating vendor spend
• Analyze payment terms across suppliers to optimize working capital
• Flag upcoming renewals with sufficient time for renegotiation

3. Continuous Risk Monitoring

Traditional contract management meant reviewing contracts once during negotiation and perhaps again at renewal time. Today’s supply chain requires continuous monitoring.

The Journal of Supply Chain Management highlights how automated contract management has become essential for adapting to global supply chain disruptions, allowing companies to quickly identify and mitigate risks.

Modern AI-based systems can continuously monitor for:

• Compliance issues across your supplier network
• Changes in regulatory requirements that affect existing contracts
• Performance metrics against SLAs
• Force majeure events that might impact supply

Implementing Contract Automation Without Risk: A Three-Step Approach

Moving away from manual, legal-centric contract management doesn’t have to be risky. Based on my experience with hundreds of implementations, I recommend this three-step approach:

Step 1: Start with One Contract Type

Don’t try to revolutionize your entire contract system overnight. Begin with standardizing one high-volume, low-complexity contract type—like NDAs or standard supplier agreements.

Forbes experts recommend starting with your most frequently used contracts to gain quick wins and build organizational confidence in new systems.

Step 2: Create Templates with AI Assistance

Instead of drafting contracts from scratch each time, use AI to help create standardized templates that embed your company’s preferred terms.

According to Supply Chain Brain, template-based approaches to contract management can reduce contract creation time by up to 85% while maintaining consistency across your organization.

Step 3: Automate Approvals Based on Risk Profiles

Not every contract needs the same level of scrutiny. Establish risk-based approval workflows that only escalate exceptions to human reviewers.

Supply Chain Management Review notes that automating routine contract approvals allows procurement teams to focus their attention on strategic decision-making rather than administrative tasks.

The Future of Supply Chain Contract Management

The evolution of contract management from legal document to business process is just beginning. Looking ahead, I anticipate three major developments:

1. Contracts will become increasingly standardized: In five years, I predict that more than 95% of routine supply chain contracts will be completely standardized, with only a handful of variables changed between versions.
2. AI will handle all routine negotiations: IBM Research has already demonstrated that AI can conduct basic contract negotiations within predefined parameters, adjusting terms based on business rules rather than legal considerations.
3. Contracts will become more visual: The contracts of tomorrow will look less like lengthy text documents and more like data dashboards with clear visualizations of key terms, obligations, and performance metrics.

For supply chain professionals, the message is clear: It’s time to stop viewing contracts as legal documents requiring specialized expertise. They are business processes that can be standardized, automated, and optimized just like any other operational workflow.

By embracing this shift and implementing contract automation software, your organization can eliminate critical bottlenecks, reduce costs, and gain a significant competitive advantage.

—–

Author Bio: Matt Lhoumeau is the CEO and co-founder of Concord, the leading provider of AI-powered Agreement Intelligence solutions. With over a decade of experience transforming how businesses manage contracts, Matt helps finance leaders unlock strategic value from their agreements and turn contracts from cost centers into profit drivers.