Last month, the ISM awarded a number of individuals and organizations the R. Gene Richter Award for Leadership and Innovation in Supply Management. The recipients were primarily organizations that had demonstrated massive improvements in their sourcing and procurement functions which came about through concentrated improvement efforts. These improvements were the direct result of the adoption and consistent implementation of best practices across the sourcing and procurement functions in the organization. This week we are discussing the best practices that helped one or more of the recipients transform their organizations and win these coveted awards.
Today we are going to talk about how legal sourcing can revolutionize sourcing as it did for Johnson & Johnson, as described in the article Odd Couple in the latest issue of Inside Supply Management.
In 2004, the World Headquarters Law and Procurement Departments at J&J formed the legal sourcing group with the initial objectives of
- identifying where sourcing support could add the most value,
- implement several “quick win” projects to demonstrate sourcing’s value,
- optimize law department processes and integrate sourcing, and
- build a sustainable support structure and knowledge base.
This partnership resulted in a database that provided detailed information to support analyses, process design, and negotiations as well as advanced reporting capabilities not previously available. This improved the quality of information available to the law department. It also helped identify 3rd party services such as copying, coding, and reporting that could benefit from sourcing expertise. As a result of new policies and the involvement of sourcing in identification, competitive negotiation, and preferred suppliers to support litigation, sourcing has saved over 3M in third party services.
As a result of this success, the legal sourcing group moved on to assisting litigation in rate change requests, case budgeting, and discovery management. As a result of the partnership, the litigation group has saved 8.7M in the first year of the partnership.
The reality is that if procurement is willing to
- listen to the needs of organizational units and learn,
- adapt sourcing tools and process to the environment (and not vice versa),
- focus on the customer’s needs and respond to them,
- establish credibility before approaching sensitive areas, and
- realize that the success of the case is paramount, in some cases costs or standard processes might have to come second,
then procurement can help legal become a more efficient and cost effective organization. Procurement: It’s not just for materials anymore!