Transportation and logistics are heavily regulated industries. They are governed by a myriad of federal, state, local, and international laws that directly have an impact on the contracts companies in these fields enter into with suppliers, employees, contractors, and customers.
This poses a significant compliance burden, as well as legal, financial, and reputational risks that are associated with non-compliance or the material breach of any of the obligations stated within these contracts. Yet, technology can, and is, being used by forward-thinking organizations in this area to mitigate much of the risk involved through active management of contract performance by making sure obligations are met. Here are three ways tech is helping the transportation sector manage logistics and compliance risk:
Staying Ahead Of Deadlines
Automated contract management software platforms have become somewhat of the norm and are at the core of timely reporting and compliance.
With this technology, staff of transportation and logistics companies receive automatic reminders of key contractual obligations well in advance and are able to view precise information on the key deliverables and dependencies within their contracts.
As simple as getting a heads-up on a contract that will auto-renew – which you might want to cancel – or as complex as being notified of certain terms that take effect when certain volume or project milestones are met or missed can be notified. Without the use of such tools and software, you run the risk of being locked into another year of products or services that you had not intended to purchase from the supplier as well as the risk of losing revenue due to a price change that you did not realize you could impose on one of your customers.
That’s not all. You can even get reminders in case you’re running behind on any of your regulatory duties. Updating the Motor Carrier Identification Report every two years, for example, obligatory for transportation companies. But with the right software solution in place, carrier owners cn get regular reminders to update their MCS 150 Form.
To sum up, technology reveals overdue items, making you less vulnerable to risk and enables you to identify savings opportunities.
Easier Contract Management
Another benefit of using contract management technology is being able to manage and enforce the use of pre-approved, standardized language for clauses that are used repeatedly within your agreements.
It is especially important in organizations where a lot of staff are involved in the contracting process – from drafting, reviewing, redlining, and editing. The technology contained in such platforms allows the organization’s non-legal staff to create and edit contacts within parameters that have already been approved by legal staff, which will not allow deviations from the standard language.
Alternatively, they can choose among a number of “alternate language” options that have been pre-approved for replacement of the standard language under certain, defined circumstances. This will especially be helpful when hiring new personnel and avoiding or minimizing potential mistakes.
Detailed Audit Trail
Involving technology in business processes helps record all changes made during the contract drafting, negotiation, redlining, and approval process is tracked and saved, providing historical records of what was changed, when it was changed, and by whom. Hence, a complete audit trail can be produced with just the click of a few buttons, so if a compliance audit is ever conducted, your bases are covered. This makes the procedure less stressful if you ever find yourself in one, especially if it is imposed by a government agency.
Historical records provide insight and visibility into these historical events retroactively. Also, you can proactively identify the costs and risks associated with errors made in the past and adopt strategies to prevent any future mistakes.
Today’s tools and software go well beyond merely organizing documents so they don’t clutter up desktops, shared folders, or hard-copy filing cabinets. These tools help professionals in various departments of the organization such as procurement, sales, financial, and legal departments to sleep better at night knowing they are in control of the risks associated with doing business in this space.