Following legal issues related to supply chain management.



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Thursday, September 11, 2008

Welcome to the Womble Carlyle Supply Chain Blog

Welcome to the Womble Carlyle Supply Chain Blog. A long time coming, this blog will capture the thoughts of our firm's Supply Chain Management team. What’s a law firm doing talking about Supply Chain Management, you ask? Is this about how the law firm buys paper, toner cartridges, and file folders?

Nope. This is about how we are adapting the practice of law to focus on, assist with, and understand how the law and outside counsel can improve our clients' supply chains, customer/vendor relationships, and be a better teammate in the quest for improved, strengthened, more reliable, and more robust supply chains. The Supply Chain is the culmination of people, contracts, processes, information, transportation and events that get the right things to the right places at the right times, generally for profit. Key areas of Supply Chain Management include contract and commitment management; global logistics, such as distribution, warehousing and joint ventures; import/export issues, including security and legal compliance; and physical and data security, as well as risk management.

The lawyer’s role should be to facilitate and improve the supply chain. This is not "new law," but a new way of considering and integrating legal issues within an overall strategy.

Our clients make up some of the biggest names in manufacturing, distribution, research, transportation, logistics, sales and service. Supply Chain Management is a critical component of their profitability, as it is for virtually any company. It is imperative, then, that all components of the business – finance, operations, procurement, legal – understand the Supply Chain and how their specific roles enhance the chain.

With assistance from renowned experts in the field like N.C. State University's Dr. Robert Handfield, we developed an approach that seeks to integrate our legal expertise to focus on Supply Chain Management problems – rather than approaching these issues in traditional legal "silos."

Our internal research yielded some obvious and not-so-obvious results:

Supply Chain and Supply Chain Management are different at each company - One size does not fit all. Variables include the nature of products, types of customers, number and location of vendors and manufacturing processes.

There are some legal risks in lean supply chains, including:
A lack of supply agreements with key vendors; differing contractual terms among vendors
information management shortcomings, particularly in the areas of forecasting and electronic data interchange; and inadequate disaster recovery planning

Does Supply Chain reliability really matter? Well, according to Georgia Tech researcher Dr. Vinod Singhal, companies experiencing supply chain disruption experienced:
7% loss in shareholder value every day of disruption
33 to 40% lower stock returns over a 3-year period pre- and post-disruption
13.5% increase in stock price volatility
43% median drop in operating income
32% median drop in return on sales
35% median drop in return on assets
11% growth in costs
Businesses have recognized the value of supply chain efficiency for some time. But the traditional structure of law firms doesn’t necessarily mesh with this new way of doing business. As lawyers, we must view our work as a piece of the whole, not as an isolated function. Furthermore, we must gauge how our work will impact our client’s overall operation. Above all, building relationships is vital in today’s global economy; it is more important than contracts. Lawyers must realize this reality and become facilitators in business relationships.

We invite to you to check back with us—we anticipate to update this blog at least monthly, and usually more frequently. We also invite you to take a look at our Supply Chain Management team site.

-- Greg Chabon

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