Use Case | Application of the Generative Model for Auditing Current Suppliers

Use Cases: Application of the Generative Model for Auditing Current Suppliers

Overview: Supplier audits are a key process for evaluating whether suppliers comply with established standards, regulations, and agreements. This generative model automates the analysis, verifying performance, contractual compliance, and regulatory adherence, helping to identify the most reliable suppliers or those requiring adjustments to continue collaboration.

How It Works:

1. Uploading Supplier Documents:
   • Users upload contracts, performance reports, certifications, and invoices related to the supplier in PDF format to the system.
2. Automatic Model Analysis:
   • The model reviews the documents, evaluating key aspects such as:
     • Contractual Compliance: Has the supplier met the terms and conditions outlined in the contract?
     • Product/Service Quality: Do the delivered products or services meet the required standards?
     • Delivery Deadlines: Has the supplier met the agreed-upon delivery deadlines?
     • Regulatory Compliance: Does the supplier have valid certifications and comply with applicable regulations?
     • Financial Management: Are the invoices accurate and reflective of the agreed terms?
3. Evaluation and Classification:
   • The model classifies suppliers into:
     • Reliable Suppliers: Those that meet most or all of the established criteria.
     • Suppliers with Risks: Those that exhibit deficiencies or breaches in key areas.
4. Report Generation:
   • The model generates a clear report including:
     • Top-performing suppliers: Those with good performance.
     • Suppliers with critical areas: Suppliers who require improvements.
     • Specific recommendations for addressing identified issues.

Example Use Case:

Scenario: A purchasing manager needs to audit 10 current suppliers to assess whether they maintain the required standards and are aligned with the company’s needs.

Simplified Process:

1. Upload:
   • The manager uploads the contracts, performance reports, and invoices of the 10 suppliers to the system.
2. Automatic Evaluation:
   • The model checks each document and verifies:
     • Does the supplier meet quality standards?
     • Were delivery deadlines respected?
     • Were the products or services delivered defect-free?
     • Does the supplier have updated certifications?
     • Do the invoices match the agreed contractual terms?
3. Results:
   • Reliable Suppliers: 7 suppliers meet all the established standards.
   • Suppliers with Risks: 3 suppliers have issues:
     • Supplier 4: Repeated failure to meet delivery deadlines.
     • Supplier 7: Inconsistent invoices with discrepancies in amounts.
     • Supplier 9: Expired quality certifications.
4. Generated Report:
   • Reliable Suppliers: Continue active business relationships.
   • Suppliers with Risks:
     • Supplier 4: Request an improvement plan to reduce delays.
     • Supplier 7: Review and correct invoices before processing future payments.
     • Supplier 9: Request certification renewal before placing new orders.

Benefits for End Users and Managers:

1. Quick and Comprehensive Evaluation:
   • Automates the analysis of multiple suppliers, saving time and resources.
2. Risk Identification:
   • Highlights critical areas in current suppliers, allowing timely corrective actions.
3. Informed Decision Making:
   • Provides clear, structured data for evaluating the continuation of business relationships.
4. Regulatory Compliance:
   • Verifies that suppliers meet required certifications and regulations.
5. Ease of Use:
   • Delivers clear results and actionable recommendations in an easily understandable format.

Summary of the Generated Report:

• Suppliers Audited: 10
• Reliable Suppliers: 7
  • Meet quality standards, delivery timelines, and regulatory compliance.
• Suppliers with Risks: 3
  • Supplier 4: Frequent delivery delays.
  • Supplier 7: Invoice inconsistencies.
  • Supplier 9: Expired certifications.

Recommendations:

• Request action plans from suppliers with deficiencies to address critical areas.
• Reinforce monitoring of certifications and delivery timelines in future contracts.
• Consider alternatives if suppliers with risks fail to improve performance.

Conclusion: The generative model for auditing current suppliers is an efficient tool to ensure suppliers meet required standards and terms. By automating this process, it identifies reliable suppliers and highlights areas for improvement where risks exist, assisting managers in optimizing the supply chain and maintaining strong, sustainable business relationships.