Use Case | Segmentation of Transport Contracts

Use Case: Segmentation of Transport Contracts

Overview:

Managing transport contracts requires analyzing and organizing critical information such as rates, delivery times, and penalties. A model that segments, organizes, and uses semantic searches enables efficient management of agreements, identifying key terms and facilitating the optimization of logistics operations. This approach is ideal for transportation, retail, logistics, and manufacturing companies that manage multiple providers and contracts.

How It Works:

1. Uploading Transport Contracts in PDF:
   • Users upload contracts with carriers, service agreements, and logistics policies.
2. Automatic Segmentation by Categories:
   • The model automatically organizes contracts into:
     • Rates: Cost per kilometer, volume discounts, fuel adjustments.
     • Delivery Times: Agreed delivery dates, average times, key milestones.
     • Penalties: Late fees, breach of contract conditions.
     • Additional Terms: Subcontracting, audit rights, dispute resolution.
3. Semantic Searches:
   • Users perform specific queries such as:
     • “Which contracts have the lowest rates per kilometer?”
     • “Identify penalties for delays over 48 hours.”
     • “Guaranteed delivery times in current contracts.”
4. Generation of Comparative Summaries:
   • The model produces summaries highlighting:
     • Rate conditions, delivery times, and penalties for each contract.
     • Contracts that require renegotiation due to unfavorable terms.
     • Recommendations based on operational and logistics objectives.
5. Storage in a Vector Database:
   • Segmented contracts are stored for fast searches and future audits.

Practical Example:

Scenario: A distribution company needs to analyze 100 transport contracts to optimize costs and ensure delivery times during the peak season.

Process with the Model:

1. Uploading Documents:
   • The 100 contracts are uploaded in PDF format to the system.
2. Segmentation by the Model:
   • The system organizes the information into:
     • Rates: Route cost, adjustments based on distance and volume transported.
     • Delivery Times: Guaranteed delivery times by route.
     • Penalties: Fees for delays over 24 hours or damages to goods.
3. Semantic Search:
   • The team queries:
     • “Contracts with the lowest rates on international routes.”
     • “Which contracts include penalties for delays over 48 hours?”
   • The system responds with:
     • Contract 1: Rate of $1.5/km, 10% penalty per day of delay.
     • Contract 2: Rate of $1.2/km, 5% penalty for delays over 48 hours.
4. Generation of Comparative Summaries:
   • The model generates a report including:
     • Rate comparison between carriers by route.
     • Contracts with faster delivery times and stricter penalties.
     • Recommendations to renegotiate contracts with high costs or unfavorable terms.
5. Report Output:
   • The team receives a consolidated analysis that prioritizes efficient contracts aligned with logistics needs.

Benefits of the Model in Transport Contract Segmentation:

1. Clear and Precise Organization:
   • Automatically segments contracts into key categories such as rates, times, and penalties.
2. Contextual and Fast Searches:
   • Provides relevant results based on meaning, not just keywords.
3. Efficient Comparisons:
   • Allows analyzing key terms across multiple contracts to optimize decisions.
4. Summary Generation:
   • Provides a clear analysis of the most relevant terms for informed decision-making.
5. Centralized Storage:
   • Centralizes contract management, enabling easy future searches and reviews.

Additional Applications:

1. Contract Audits:
   • Verifies that rate, time, and penalty conditions meet operational objectives.
2. Contract Renegotiation:
   • Identifies unfavorable or costly terms that require adjustments.
3. Logistics Optimization:
   • Helps select the most efficient contracts for critical routes or peak seasons.
4. Risk Management:
   • Highlights clauses that may generate conflicts or operational risks.
5. Regulatory Compliance:
   • Ensures contracts comply with local and international regulations.

Practical Example:

Additional Scenario: A retail company needs to ensure fast delivery times to maintain customer satisfaction during the holiday period.

Without the Model:

• The team manually reviews contracts, which takes weeks and increases the risk of overlooking important details.

With the Model:

• The system automatically segments contracts and generates a report that highlights:
  • Contract 1: Guaranteed delivery times of 24 hours, 10% penalty for delays.
  • Contract 2: 48-hour delivery times, lower rate but no penalty for delays.
  • Recommendations: Prioritize carriers with guaranteed times and strict penalties to avoid critical delays.

Conclusion: The automated management of transport contracts through segmentation, semantic searches, and summary generation significantly enhances operational efficiency and the optimization of key terms such as rates, delivery times, and penalties. This model is ideal for logistics, retail, and manufacturing companies seeking to maximize efficiency and minimize risks in their transportation operations.