Many procurement managers and executives often inquire as to whether using a supplier scorecard is an efficient use of corporate resources or a waste of necessary manpower in today’s corporate “belt-tightening” approach to managing purchasing operations. While there is no easy answer to this question, generally, the correct answer for each individual purchasing team will likely depend upon the size of the team, the contents of the scorecard and whether the results are considered in the final decision-making process.

As many of you know, a supplier scorecard is a tool available to purchasing managers to determine the effectiveness of vendors across the supply chain. Usually, scorecards provide managers with a resource to evaluate vendors across numerous dimensions to determine if corporate goals are being achieved, while simultaneously creating a uniform process to rank the performance and capabilities of each vendor. Small to mid-size corporate purchasing teams often find the process effective, yet time-consuming, while larger teams tend to find scorecards helpful, but not considered when critical decisions are made by purchasing managers and internal stakeholders.

Supplier scorecards can be effective, regardless of the size of the corporate purchasing team, as long as the scorecard (i) meets the goals of the corporate purchasing operation, (ii) is not time-consuming or burdensome on purchasing managers and the internal stakeholders and (iii) is instrumental in the decision-making process. Purchasing teams using or contemplating using supplier scorecards should determine the purpose of the scorecard, allocate time for completion on an ongoing basis and determine how the findings will be used in selecting, retaining or terminating a supplier. With proper planning, supplier scorecards can be powerful tools that ensure that vendors are accountable and corporate purchasing spends are aligned with purchasing goals.

The governing law provision of an agreement articulates the parameters of the body of law governing any legal dispute arising under such agreement.  Therefore, the governing law provision is an important provision of an agreement, and should not be omitted.   Generally, a well constructed governing law provision addresses forum selection and choice of law.  Forum selection determines the state in which any dispute under the agreement will be litigated.  Adverse parties can utilize the choice of forum for strategic advantage during the litigation process.  In addition, by designating the choice of forum in the agreement, parties can anticipate risks, guarantee a favorable forum, and limit strategic advantage to the opposing party.  Accordingly, when drafting the agreement, it is wise to choose a state whose location and procedural laws are favorable to your position. 

Choice of law is an equally important part of a governing law provision.  This clause indicates which body of law will be interpreted by the court in the selected forum.  The choice of law clause prevents disputes over which law governs the agreement.  Without agreement by the parties on the choice of law, courts must make a complicated judicial determination for each dispute.   When making the decision as to which body of law should govern the agreement, you should choose the law of a jurisdiction that is stable, developed, and familiar.  Each of these elements, taken in concert, will likely assist your entity in a corporate dispute.

Welcome to Procurement Corner, a blog sponsored by The Flowers Counsel Group, LLC, that is designed to provide our clients, procurement managers and those executives in supply chain management with an effective online resource. Our firm encourages you to express your procurement concerns and experiences in this online forum and our attorneys, along with your colleagues in various in sectors and industries, will provide you with guidance and feedback from time-to-time. This is just one of many ways that our firm is “redefining the legal landscape” by using technology to focus on your daily procurement needs.

As usual, if you require any legal assistance, please do not hesitate to contact us. We hope this blog will become part of your daily procurement routine!