Crafting Procurement Competency in Spin-Offs: Transitioning with Precision White Paper

Introduction In the complex landscape of corporate restructuring, spin-offs stand out as both an opportunity and a challenge. A spin-off, by nature, involves carving out a section of an existing entity to create an independent company. While this process has many facets—ranging from strategy to human resources—one of the most critical aspects often overshadowed is the need for an effective procurement transition. Procurement, the backbone of any organization’s operations, becomes even more significant during spin-offs. This is because transitioning from a well-established, integrated procurement system of a parent company to creating a new, independent procurement capability is no small feat. As companies embark on this journey, they face the prospect of setting up new supplier relationships, renegotiating contracts, assessing supply chain risks, and ensuring that the spun-off entity can sustain its operations from Day 1.

However, with challenges come opportunities. Establishing a new procurement capability provides a unique chance to craft systems that are agile, efficient, and tailored to the specific needs of the new entity. It’s a reset button, allowing for innovation and optimization. By leveraging best practices, technology, and expert guidance, especially from Alternative Legal Service Providers (ALSPs), companies can navigate this transition smoothly, ensuring they’re not just replicating old systems, but building better, more effective ones.

As highlighted by a report from Bain & Company on Divestitures and Spinoffs (https://www.bain.com/consulting-services/mergers-acquisitions/divestitures-and- spin-offs/), the intricacies of managing such transitions can make the difference between a successful spin-off and one that struggles. One key challenge emphasized in the Bain article is the question of how to maintain procurement continuity during this transition, ensuring no disruption to the operations of both the parent company and the spin-off entity. Contracts, long-standing supplier agreements, and operational synergies built over years must be reevaluated, renegotiated, or, in some instances, initiated from scratch.

This white paper delves deep into these challenges and provide insights and solutions, illustrating the importance of strategic foresight, expert partnerships, technology, and a clear understanding of both contractual and procurement dynamics during a spin- off. It sheds light on the nuances of procurement transition during spin-offs, emphasizing the significance of establishing robust procurement functions and highlighting the invaluable role of ALSPs in this transformative journey.

Read the full white paper.

OASIS Cycle®

The Solution for Complex Contracts Projects

Managing high volume contracts projects in a large corporation is complex and time consuming. There are many moving parts requiring the need to adapt quickly to changing business needs and unforeseen complications. All this must unfold while nurturing relationships to ensure the success of the transition and set the stage for continued good will between all stakeholders. It would be ideal to customize a standard work-flow process that is then optimized by an experienced team.

A corporation may experience the need to manage large-scale contract projects in a few situations:

  • A large corporation is divesting a piece of its business and needs assistance with pre-sale due diligence activities, pre-close obligations related to contract separation and post-close project close-out.
  • A firm is purchasing a business or providing managed services to a customer that requires the acquisition or transfer of contract assets, licenses and/or intellectual property.
  • A company is deciding to centralize and standardize a contracts function, commonly involving a de-centralized procurement organization’s numerous supplier or vendor contracts.

The OASIS Cycle® is a solution for managing complex contracts projects. The OASIS Cycle® combines people, process and technology, yielding repeated operations that result in a high level of synergy and optimization. There are 5 key elements in the OASIS Cycle®: Organization, Analysis, Standardization, Institutionalization and Synergy.

Let’s look at scenario #1 to illustrate the OASIS Cycle®. Imagine a large corporation is divesting one of its technology businesses to a buyer. In order to identify the ultimate buyer, the corporation will first need to make certain information available to potential buyers. Part of this information will be the corporation’s written procurement contracts which will impact the eventual buyer’s operation of the business.

Read the full white paper.

Trademarks

View this document in an interactive booklet at:
https://papermine.com/booklet/30502426/

Capability Statement: Helping Corporation Simplify Contracts Projects and Reduce Legal Spend

View this document in an interactive booklet at:
https://papermine.com/booklet/21134991/