Glaxo Smith Kline: Sourcing Complex Professional Services Case Study Solution
Introduction
Glaxo Smith Kline (GSK) is a British pharmaceutical company, producing medicines. The company has been suffering from the extra expenses on the legal matters it was paying yearly. The company was considering outsourcing all its legal matters to the law firms based on new proposed system since the company had been incurring unnecessary cost for the legal issues.
In addition, the company did not know what, and how much it spent spending on the legal matters around the world in millions of dollars annually. Similarly, it did not have the electronic billing systems that could have helped to set up billing guidelines. Thus, the company required its legal team to create and stick to the budgets, not only manage the risk at whatever cost incurred.
Beyond all these matters, the company in efforts to rein in the cost, General Counsels (GCs) started efforts to shift the work on less costly or to efficient firms. With these efforts, the company would incur less cost in its legal processes. Similarly, the company went through various approaches to cut the cost, and ensure the quality of the work.
In addition to this, GCs approach also tried to negotiate the discounts, froze rates, and demanded alternative fee arrangements (AFAs) rather than being billed for the number of hours’ law firm worked, which also included the fixed fees, retainers, and contingency fees as well. Through these processes the companies would have been able save the extra spending on the legal matters.
On the other hand, some GCs introduced the lean Six Sigma, a quality management process while reducing the cost, and time. Finally, the company approached the new procurement process for the GSK legal matters to outsource the process under newly designed criteria, which included the selection of the firms based their performance, and experience, and the cost they asked.
Background
GSK has been considering new procurement process, which could have saved the additional, or unnecessary costs incurred in the legal matters. Thus, the company was looking for the outside counsel. In order to know what was happening in the legal department, Marty Harlow was given the task to know the current selection and relationship-management practices used by the legal department and to generate a presentation along with the final recommendations.
However, Harlow went two steps ahead and brought aggressive idea of hiring outside legal-service providers. He was being supported by the GCs, and he was positioned to procurement-savvy attorney to implement the new procurement processes in the company. Through the major sourcing work, such as hiring outside counsel for the important litigations, Harlow’s tough stance in negotiations saved GSK an estimated $23 million.
Body
GSK is ready for the final shot to cut the unnecessary cost of the legal process, where the company was incurring millions of the dollars annually. However, firms always billed the company on hourly basis. However, it was not feasible for the company to further continue to spend large portion of amount the legal proceedings, where it was possible to cut the spending through new procurement process. Thus, it went to assign the task of implementation of the new procurement processes that would allow the company to reduce the cost. However, the quality of the work, and selection of the law firm was a major hurdle to jump.
Furthermore, it was decided to outsource the services, because the company had already made efforts to come up with the suitable options, and alternatives to meet the criteria of less cost, and quality work. However, there were other complications that could be discussed more broadly to avoid the pitfalls during the decision-making process.
GlaxoSmithKline Sourcing Complex Professional Services Harvard Case Solution & Analysis
Key Issue
The company was spending millions of dollars annually on the spending on the legal matters. However, it was identified that there was also extra unnecessary cost incurred that could have been avoided through the new procurement process. On the other hand, the company even did not know about the spending on the legal matters, and legal department exceeded the budget sometimes. Therefore, it was challenge for the company to manage the spending on the legal matters, and find another solid process that could not only cost less, but also provide quality services since quality is very important in the legal work.......................
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