Exploring the Intersection of Procurement, Contracting, and Legal: A Future Look Courtesy of KPMG
Categories: Innovation, Learning / Research, Procurement Commentary, Procurement Research, Supply Management | Tags: KPMG, L2, Process and Best Practice
In recent weeks, we’ve been highlighting some astute observations from a KPMG paper exploring the future of procurement in 2025: FUTUREBUY: The Future of Procurement – 25 in 25: Delivering procurement value in a complex world. One section that has not received enough attention is the intersection of procurement with contract negotiation, implementation, management, and legal. This is a topic that IACCM, the organization Tim Cummins has led for years, does a marvelous job exploring – but unfortunately has not attracted enough procurement folks into the fold as it should. But we think this will change, especially if you read KPMG’s and IACCM’s thoughts on the subject.
As KPMG observes, “legal expertise and knowledge is essential for contract creation, adaptation, and management, to ensure mutual value is created while global regulatory laws are complied with … Global contracting is an area in which procurement can play an increasingly vital role, but it also an area fraught with challenges given the different cultures, rules, regulations, and terms. In such cases, effectively and appropriately managing the balance between a global and local supply base, and being fully cognizant and respectful of differences and requirements, are paramount to all parties’ success … In addition, the need to better understand the flow of goods and the economic issues associated with contractual terms and conditions is becoming more important. Many contracts contain clauses and issues related to terms and conditions that are often at odds with suppliers’ expectations.”
The nuance and expertise required to address contracting and supplier engagement transcends the standard skill set of both legal and procurement, making the specialized expert in it, often with a legal degree but with procurement experience all the more valuable and unique. Consider, as KPMG notes, that “to effectively navigate the landscape of legal requirements, the knowledge base will increasingly span a number of local, regional, and global regulatory requirements. Examples include the harmonized tariff structures that impose customs duties based on country of origin or value-added content, conflict minerals that are banned for use in certain products, companies in countries that are impacted by the Foreign Corrupt Practices Act, or other ad hoc tariffs or duties that are imposed in a punitive manner on certain industries for political impact.”
Are we hearing the intersection of procurement, legal, customs compliance, tax and related areas as a common skill and concern for 2025 in supply management? You bet!