Consolidating purchases with fewer, preferred vendors will yield greater leverage to negotiate both favorable pricing and value-added terms and conditions, such as; service level commitments and penalties, extended warranties, expedited delivery schedules, favorable return policies and advantageous payment terms.

As a general rule, the fewer suppliers, the better. However, a firm’s ability to forge long-term relationships with a select number of preferred vendors will depend on the product involved and the degree of purchasing centralization that the firm is willing to sanction. Many organizations choose to implement a hybrid solution whereby the purchasing activities for products and services that are used firm-wide (i.e., technology hardware and software, office equipment, office services, supplies, employee benefits, library databases, etc.)are centrally administered while purchasing for specific office needs (i.e.
recruiting, event planning, facility services, local transportation, catering, etc.) are handled at the local level.

Establishing relationships with preferred vendors alone will not yield maximum financial benefit, unless employee spending is channeled to those vendors. “Maverick spending” occurs when employees purchase items and services from suppliers that are not on the firm’s preferred vendor list. As a result, an item or service is often purchased at a higher price without the benefit of previously negotiated discounts or value-added terms and conditions. Changing employees’ buying habits is one of the more challenging aspects of strategic purchasing. Strong support from senior management and clearly established purchasing policiesand procedures are required in order to successfully reign-in maverick spending.

Employees will gravitate towards the path of least resistance. Maverick spending is often facilitated through alternative methods of purchasing that are available to employees such as credit cards, check requests and petty cash vouchers. One method to combat maverick spending is to simplify the process by which employees procure goods and services. This can be accomplished by developing simple, easy-to-use, procure-to-pay processes that steer employees toward preestablished vendor relationships. Also, procurement policies and procedures must be flexible enough to support purchases of non-standard or emergency items and services.

In addition to focusing on reducing costs and improving the quality of goods and services, purchasing best practices aim to create more efficient procure-to-pay processes. These efficiencies can only be realized by reengineering procurement processes to reduce the amount of time and quantity of resources that are required to requisition, receive and pay for goods and services.

There are many effective eProcurement systems available in the marketplace that can be used to automate a firm’s purchasing processes. When properly deployed, these systems will simplify the ordering process by becoming the path of least resistance and thereby reduce maverick spending. Some of the benefits that eProcurement systems provide include on-line ordering, catalog management, electronic approval routing, and receiving and invoice matching capabilities.

The eProcurement system also serves as the information repository for all purchasing activity. An effective purchasing database will enable endusers to query the status of their orders and provide procurement managers with analytical capabilities for strategic planning purposes. The eProcurement system will be the primary gateway for the flow of information between the firm and its preferred vendors. Therefore, the gateway should provide a variety of methods for electronic inbound receipt of vendor quotes, invoices and credit memos and outbound transmission of purchase orders and payments.

Procurement best practices such as sourcing preferred vendors, reducing maverick spending, establishing purchasing policies and procedures and automating procure-to-pay processes are most likely to be achieved if the purchasing function is staffed with seasoned procurement professionals. These individuals have proven capabilities with respect to performing cost analysis, sourcing vendors, conducting RFP’s, negotiating contracts, managing supplier relationships and automating procure-to-pay processes.

Many law firms are recruiting “Heads of Procurement” to launch firm-wide procurement initiatives. Alternatively, other law firms are hiring specialized purchasing professionals within their Operations or Facilities departments who concentrate on targeted areas of firm spending such as technology, library database subscriptions, office equipment and lease negotiations. These purchasing “Buyers” have prior purchasing experience and possess specialized knowledge of their specific area of procurement expertise. By hiring individuals with proven purchasing expertise, the implementation of procurement best practices will be accelerated.