A paradigm shift is occurring in today’s business world, which will undoubtedly lead to major changes in several different areas of law. The catalyst for this revolution in business processes and protocol is what is known as “Supply Chain Management” (SCM). SCM is defined as the direction and oversight of physical and intangible resources as they progress from supplier to manufacturer to wholesaler to retailer (and finally) to end-user. In addition to inventory management, SCM also encompasses software integration, raw materials and component sourcing, product design and manufacture, fulfillment and delivery, financing, and contract management. In light of the stagnant U.S. economy — which has been further jolted by the recent terrorist attacks — enterprises of all size are turning toward SCM to curb expenses and increase cash flow.
The ubiquitousness of SCM in today’s business world compels lawyers to become knowledgeable about it. According to Michael O’Rourke, Senior Vice President and General Counsel of Covisint, the principal ebusiness exchange for the auto industry, automation has transformed procurement from a relationship-based function to one centered on transactions. “Therefore,” says O’Rourke, “these seismic changes in purchasing methods require lawyers to play an active role in coordinating and monitoring numerous third-party supplier relationships — as well as to enforce the terms of each agreement that governs such partnerships.” Moreover, O’Rourke rightly points out that proprietary rights issues, which often arise in the context of joint development agreements between supply chain partners, must be carefully examined by counsel prior to execution.
