A faster pipeline of data
90%
Flowserve accelerated processing for more than 90% of its contracts, reducing errors by almost 90%.
+6x
Flowserve is using machine learning and optical character recognition to process contracts 6x faster.
500,000
Each year, Flowserve processes more than 500,000 pages of contract information.
At a glance
Client
Flowserve
Industry
Manufacturing
Our role
Accelerate contract processing
Our solution
Implement innovative technology
How automation improved contract analysis and accuracy
Scenario
Flowserve, a manufacturer and service provider, wanted to save time, cost, variations and errors in its contract reviews.
Approach
Grant Thornton helped Flowserve plan, develop and implement a machine learning and optical character recognition solution.
Result
Now, Flowserve can process more than 90% of contracts 6x faster, with more accurate results.
Scenario
Manual contract processing
With more than 300 locations around the world and almost $4B in revenue, Flowserve Corp. is a global provider and servicer for pumps, seals, valves and other fluid motion products. The company has 180 customer service centers that provide parts and services, and it contracts with a wide range of global customers.
To make sure that all of its sales contracts were compliant with ASC 606 Revenue Recognition requirements, Flowserve employees manually reviewed the relevant details from contracts across many document formats — including some that were up to 100 pages long. Then, employees determined the performance obligations and revenue method to applied to those contracts. These manual reviews involved different employees and standards worldwide, were time-consuming and inefficient, and introduced a risk of human error. Even contracts from the same customer might follow a variety of formats. Lastly, the manual reviews left contracts trapped in paper files where leaders couldn’t access or analyze data across the range of agreements.
Flowserve wanted an automated solution to identify and classify contracts, quickly extracting the customer, offering, promises, price, terms, conditions and other details. The company also needed to identify relevant contract data element exceptions, and to store the details in a system that could fuel compliance reporting and business analysis. In all of this, the company needed to ensure that the contractual data remained compliant with security requirements.
Approach
Machine learning and OCR
The Grant Thornton team assessed options and developed rules to outline the company’s requirements. Based on these, the team determined machine learning technology and optical character recognition (OCR) capabilities that would best meet the client’s needs.
“When we started this discussion, we were looking at multiple solutions,” said Grant Thornton Transformation Advisory Managing Director David Dominguez. Flowserve wanted a cloud-based modern technology process with advanced capabilities to automate data extraction, indexing, classification and validation while identifying exceptions for relevant contract data elements. The company was impressed with the machine learning, OCR and intelligent character recognition functions that the Grant Thornton team demonstrated.
The team began a proof of concept (POC) project to scan paper documents and automate contract processing for the accounting and finance functions. Although the scope was limited, it still required the solution to extract 54 fields of data from contracts spanning multiple nations and currencies. To achieve success, the project needed to prove that it was a feasible solution for both higher productivity and fewer errors.
During the POC, the team found that contracts used a wide range of terms and conventions to identify similar information. The team refined and expanded the list of terms that triggered automated tasks, creating more complete lists that automatically handled a wider range of term variations. “It allowed us to gain additional clarity on requirements,” said Grant Thornton Transformation Advisory Manager Will Morse. “It let us pivot and proved out some things that made the implementation so successful in the end.”
The team also designed a stopping point into the solution. Flowserve wanted to be able to stop the automatic processing so that employees could selectively review extracted data before it was entered into the cloud-based revenue recognition standard. “They wanted to have everything stop so that they could still do checks, but without having to hand-key the data,” Morse explained.
Once the team refined the POC solution, it was ready to expand. “We used the pilot as a springboard into the full implementation,” Morse said. The solution’s capabilities quickly scaled up to serve more business areas and process more data. “One of the technical specialists said he was impressed by the volume of data the solution was processing,” Morse recalled. Flowserve was also impressed by the solution’s adaptability to updates and modifications over time.
Result
Greater speed and accuracy
Now, Flowserve can complete contract processing as much as 6x faster. “For a complex contract with multiple change orders, it took an average of 4–6 hours for a reviewer to make a revenue recognition determination,” Morse said. “Now, they’re down to about an hour.”
Flowserve processes about 10,000 contracts per year, containing more than 500,000 pages of information. The new solution can process more than 90% of those contracts automatically. By eliminating manual data entry, the solution also decreased errors by almost 90%. It also automatically extracts key terms and conditions, so that processors can identify which ones might be in other contracts and ensure standards.
The Grant Thornton team planned the project so that Flowserve could maintain it going forward, but Flowserve has also found it helpful to call on Grant Thornton support. “They’ve had some people change roles in this practice,” Morse said. “They want to re-engage us to help get new people up to speed.” Meanwhile, Flowserve has also continued to expand the solution’s scope.
As the Flowserve implementation has expanded, more employees have been impressed with the results. “They’ve noted the flexibility of the system — how it can capture almost anything,” Morse said. “The full implementation was designed to initially address the top 70 high-volume customers. Now, they have a new top-70 list of customers, and they are working to adapt to that additional set.”
Plus, expansions into the company’s Accounts Payable, Legal and Human Resources departments are on target to apply the company’s returns on the initial solution.
“The key thing is that we’re minimizing costs by eliminating manual processes, while also increasing the accuracy and quality of the results,” Dominguez said.
Related Resources
CASE STUDY
Content disclaimer
This Grant Thornton Advisors LLC content provides information and comments on current issues and developments. It is not a comprehensive analysis of the subject matter covered. It is not, and should not be construed as, accounting, legal, tax, or professional advice provided by Grant Thornton Advisors LLC. All relevant facts and circumstances, including the pertinent authoritative literature, need to be considered to arrive at conclusions that comply with matters addressed in this content.
Grant Thornton Advisors LLC and its subsidiary entities are not licensed CPA firms.
For additional information on topics covered in this content, contact a Grant Thornton Advisors LLC professional.
Ready to talk? We’re ready to listen.
Request a meeting and a member of our team will be in touch to see what we can do to meet your needs.
Want to submit an RFP? Please submit your request through our RFP submission page.
Trending topics
No Results Found. Please search again using different keywords and/or filters.
Follow us
