Historically, purchasing departments focused on the purchase of raw materials, production items and MRO supplies. Yet, [more than] half of all purchase dollars are not spent on goods at all, but on so-called "nontraditional" services. (1) Increasingly, purchasing is being asked to take over non-traditional areas of responsibility that have nothing to do with the manufacturing process. (2) By utilizing the skills honed on "traditional" areas and adapting familiar tactics to unfamiliar areas, purchasing can make significant contributions in the purchase of professional services such as legal, accounting, tax, design and engineering.
Trends in Purchasing Legal Services
Managers of in-house law departments, like managers in other areas, are under increased pressure to reduce outside expenses. In-house corporate counsel reported an 18 percent decrease in spending on outside counsel between 1996 and 1997 and an estimated further reduction of 18 percent from 1997 to 1998. (3) Contributing to this trend are: 1) the "convergence" of legal work to fewer firms, 2) the emergence of specialized temporary legal service providers, 3) the "unbundling" of services, and 4) expanded alternative billing options. Legal trade journals contain many articles on the cost-effective management of outside counsel. Yet, many internal users, who have focused on obtaining the best legal services available for their organization, have little practical experience or expertise on maximizing the return on their outside expenditures.
Why and How Purchasing Can Improve the Purchase of Professional Services? Purchasing brings skills, processes, discipline and focus to complement the service-specific knowledge and experience of the internal users. Purchasing can assist internal users with defining the scope of the project, selecting the right supplier, negotiating and structuring compensation, evaluating supplier performance, and leveraging business with preferred suppliers. Unless the buyer has expertise in the particular service being purchased, it is probably preferable for the buyer and the internal user to work as a team in the purchase of professional services.
Ten Familiar Tactics to Apply to the Purchase of Professional Services
Identify the Scope and Objectives of the Project. Users of goods generally create written specifications to communicate their needs to the buyer and potential suppliers. While the practice of documenting specifications for goods is well-ingrained...