Purchasing Department – Legal support strategy
The development of an industrial company’s activities may depend on the performance of supplies and purchases of products, services, raw materials, software and other items. In many companies, the team in charge of these activities is sometimes called “Procurement”. In order to guarantee the purchase of products or services and to ensure negotiations for the benefit of the company, entrepreneurs need a team of qualified lawyers or attorneys who will be able to adopt the best procurement management strategies.
Legal support for procurement departments can sometimes pose some difficulties:
- Need for quick reaction when lawyers may have other priorities,
- Need for systematic checks by purchasing category which may not present a very stimulating intellectual challenge from a legal point of view,
- Need for rigor and finesse in the legal analysis given the impact on the company’s production and profitability.
Legal support for purchasing activities is sometimes perceived – wrongly – as non-strategic. In fact, legally securing excellent supplies at the best price is a factor in the success of the company. The performance of the purchasing department has an impact on the company’s production, its financial health but also on other aspects such as innovation.
We offer you expert services to properly apply the legal approaches that govern the negotiation and preparation of purchase contracts, namely;
• Preparation of general purchase conditions
• Definition of contract-by-contract negotiation strategies
• Common contract law
• The provisions of the Commercial Code relating to exclusivity clauses, freedom of pricing and competition
• Regulations on the use of unfair terms
We combine techniques and expertise to provide legal support to your company’s purchasing department, within the framework of the rules in force.
Purchasing encompasses several management techniques, which promote the delivery of products pre-ordered by the company (order execution, transport and follow-up) as well as the transmission of an official document to establish a supplier invoice (receiving order, delivery notes, purchase orders, etc.).
We provide you with the following solutions to facilitate the activities of your company’s purchasers, while guaranteeing its optimization to meet your needs:
Depending on demand, a company can choose between three types of procurement:
• JIT (just-in-time): no anticipation of needs, limited stocking by purchase on demand,
• MRP (management of production resources): purchase limited to components or supplies according to needs,
• Kanban: limited storage, progressive supply according to orders.
Factors to be taken into consideration
To ensure effective purchasing management, particular attention should be paid to the following factors;
• Supplier guarantees
• Contract termination methods
• Intellectual property transfers
• Continuity of service
Legal strategy to guide and support procurement activities
Legal strategy is essential to the successful negotiation of a company’s procurement contracts. It encompasses specific management techniques that will enable lawyers to manage the contract life cycle advantageously and ensure that the company’s interests are defended in the most effective way possible. The legal strategy for the management of purchases includes;
• The definition of general purchasing conditions,
• The definition of specific purchasing conditions according to the type of product or service in question,
• Creating document formats that enable effective communication between internal and external parties,
• Definition and implementation of negotiation objectives,
• Through this legal strategy, our lawyers and legal experts can help you renegotiate, renew or terminate a procurement contract.
We have a team of more than 130 lawyers at your disposal to establish your legal strategy for guiding and supporting procurement activities.
Our team of lawyers specialized in business law can assist you in establishing a legal strategy to support your procurement activities and provide day-to-day legal support to your buyers.
The definition of general and special purchase conditions
The general terms and conditions of purchase cover all the standard clauses relevant to creating the purchase contract itself: liability, duration, renewal, force majeure, confidentiality, intellectual property, method of termination of the contract, protection of personal data, etc.
Several other issues are also addressed:
• Ensuring the smooth running of logistics operations
• Calculating requirements and monitoring the execution of the purchase contract
• Setting up a procurement plan
• Setting key performance indicators or KPIs to monitor the evolution of orders
• Establish the planning and execution of replenishment orders
• Compare and evaluate offers from key suppliers (benchmarking)
• Choose the best IT tools to improve the supply service (supply chain management, WMS software, etc.)
• Define the stock control policy (reduce stocks, maintain stocks, manage flows, stock types, stock placement, stock-outs, etc.)
• Resolve disputes
• Improve supply chain management and ordering
Special purchase conditions are sometimes used for specific supplies: regulated products and services, digital purchases, specific delivery conditions, etc.
A purchase order can also be useful as, if well designed, it facilitates the work of buyers and creates more transparency within the company.
All too often, negotiating a purchase contract requires the draft contract to go through several rounds of validation by several people. These processes are long and inefficient.
Investing some time in defining negotiation objectives and limits to what the company is willing to accept in each case is an effective way to save time and increase assertiveness in the negotiation process.
It is also a very important way of limiting the impact on managers in terms of validating the results of the negotiation. Of course, for this to be workable, it is important to record this guidance in effective materials when using it in negotiation. This exercise requires significant experience and expertise.
The supply contract, whether exclusive or not, is regulated by the Commercial Code. In drawing up your company’s supply contract, we have the necessary expertise to negotiate the terms of the contract in your favor. Indeed, we can advise you on these aspects.
Contract Review Formats
At GOlegal, we have 4 formats available to meet the needs of our clients. These formats can be freely selected by our clients on an engagement-by-engagement basis. These are the following models:
1) The use of the Reviewer ® which is a tool developed by GOlegal to treat reviews as risk analysis. In a very short period of time, the client of our services can get an idea of the type of issues raised and their importance.
2) Review in format followed by changes in the text. This approach is very useful for documents that do not require too many changes per page to remain readable;
3) Review in table format, which allows you to compare the text before and after the change.
4) Review in email format, which is very useful for reviewing rather short PDF documents.
To ensure the profitability of a company, the supply chain coordinator must establish an effective management strategy to improve the methods of acquiring products or goods. To do this, the legal procurement team must:
• Reform negotiations to improve overall operational efficiency. Reform negotiations to improve overall operational efficiency, with significant savings to be made by re-negotiating agreements on a regular basis.
• Strengthen relationships with suppliers to reduce procurement costs by ensuring that the quality of procurement products is maintained.
• Conduct regular stock checks to establish effective strategic sourcing approaches. Contractors need to be aware of the storage cost associated with inventory.
Establish a supply contract
If you want to improve your company’s supply and inventory management plan. Or to resolve disputes related to the above techniques, please contact us via our website GOlegal or send us an email directly.