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Strategic Sourcing

By Bret Baccus and Fraya Lynn Hirschberg
January 29, 2010

Law firms face an ongoing challenge to reduce costs. Proactive firms can reduce their recurring costs for goods, equipment and services while maintaining quality and service levels by developing and implementing strategic sourcing programs. Strategic sourcing involves systematically examining spending as a whole and developing a holistic strategy to achieve greater savings than could be gained by “one off” cost-cutting measures. While strategic sourcing does not include payroll costs, enhancing the quality of non-payroll services will indirectly help payroll cost management.

The benefits of well-managed strategic sourcing can be substantial, positively impacting the bottom line and increasing competitive advantage. Huron Consulting Group's clients that engage in strategic sourcing have reduced their recurring costs 5%-15% within six months to a year, through addressing issues such as sourcing, demand management, consumption and contract compliance. For some large firms, these savings can add up to millions of dollars. Following are some commodity categories where significant, repeatable savings can be seen:

  • Courier;
  • Document storage;
  • Facilities;
  • Food services;
  • Ground transportation;
  • Insurance and benefits;
  • IT hardware;
  • IT software and services;
  • Office-related products;
  • Printing and publishing;
  • Reprographic services;
  • Subscription services;
  • Telecommunications;
  • Temporary labor and executive placement services; and
  • Travel and entertainment.

Because cost is part of the value chain, a firm's strategic sourcing program can also strengthen client relationships and marketing initiatives. Firms that can show clients they are taking active steps to control not only passed-through costs but also internal overhead costs, also demonstrate that they are efficiently run, cost-aware organizations. Value-driven corporate law departments appreciate firms with a similar respect for economy and efficiency.

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