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September 29, 2016

Time for legal to soar into the Cloud
(Series 3 of 3)

We looked closely at the compelling reasons for adopting a cloud-based legal solution in Part 1, and ways to mitigate supplier risk in Part 2. In this third and final blog in the series, you’ll discover how other organizations have made cloud solutions integral to the way they do business.

Proof of government compliance

In the interest of full disclosure, I am the general counsel of Determine, a global provider of cloud-based contract lifecycle management, strategic sourcing, supplier management, and procure-to-pay solutions. I’ve seen customers faced with difficult regulations and secretive suppliers that have successfully leveraged our solutions to solve their supplier issues. Here’s a recent example.

The United States Department of Veterans Affairs (VA) was in the process of renewing a significant vendor agreement with a global pharmaceutical company from Pennsylvania. The contract with the VA required the pharmaceutical company to establish spending goals with a range of small-business and diverse sub-contractors. These included HUB Zone certified businesses as well as woman and veteran-owned businesses. In order for the critical contract to be renewed, the pharmaceutical company had to show progress toward reaching these spending goals. The risk extended beyond just the loss of this critical contract because failure to achieve these spending goals could lead to financial penalties and the loss of contracts with other government agencies.

Monitoring these suppliers, and the pharmaceutical company’s annual spend, developed into a cumbersome and time-consuming activity. The process was riddled with errors and required hundreds of hours manually entering and analyzing data. To solve the problem, the company decided to extract their supplier data from a larger unwieldy database containing all of the company’s suppliers and insert the cleansed supplier data into an easy-to-use, searchable database. Secondly, the company implemented a cloud-based supplier information management solution that enabled suppliers to self-register ensuring that there were no errors introduced by the pharmaceutical company. Suppliers were eager to register as the pharmaceutical company wanted to increase its spend with these businesses. Lastly, the pharmaceutical company combined its own internal spending data with the certified supplier registry in one online dashboard giving unparalleled access and transparency into its spend. The time the company spent to produce the required reports for the VA dropped by hundreds of hours in the first year. Beyond the money saved on fewer team hours, the company successfully renewed its contract with the VA and avoided the costly penalties that could have arisen from poor insight into its own suppliers.

Supply chain excellence

One of the world’s largest grocery store operators was a pioneer in developing and embracing an e-sourcing cloud-based solution in which suppliers bid to provide different products and services to the chain. While the platform eased friction in the transactions between the buyer (the grocery chain) and its suppliers, it didn’t give the grocery chain much visibility into its sup- pliers. For example, did its suppliers have the appropriate insurance and food-handling certifications? The grocery chain also wanted to know if its suppliers were meeting diversity and sustainability goals.

To address these issues, the company implemented a cloud-based supplier information management system that required all suppliers to register through a new supplier portal. During the registration process, suppliers had to prove they were in compliance with key areas such as food safety, diversity, sustainability, and social compliance.

Beyond simply checking boxes, suppliers were required to provide food-safety certificates, tax identification numbers, and proof of insurance. By customizing online dashboards, business leaders could measure the health of their suppliers with respect to their key metrics: insurance coverage, health and safety records, etc.

This 360-degree view into their suppliers enabled the company to manage risk and work with suppliers who were out of compliance and appropriately engage their internal counsel to help get in front of potential issues.

Beyond reviewing contracts

As Ronald Reagan said, “Trust, but verify.” Hopefully, your company has better relations with its suppliers than the United States had with the USSR during the Cold War, but the old adage still applies. Organizations must proactively manage risk. In an increasingly linked and globalized world, this requires an unprecedented level of knowledge about your suppliers. Absent unlimited team bandwidth and resources, the most cost-effective way to gain the necessary insight is to invest in a cloud-based supplier information management solution.

* If you have questions, please let me know—I can be reached at afisher@determine.com. Better yet, schedule a demo to see our solutions in action. At Determine, we’ve had the privilege to work closely with our customers on refining our Cloud Platform of advanced solutions. If you’re new to all this, be sure to check out our vast library of free resources.

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