Wednesday, March 11, 2009

Work with your suppliers to reduce sourcing spending

March 11, 2009 Published by

IT/Business Strategies
Cost reduction tips for your strategic sourcing contracts
Vince Pultorak, Contributor

The current economic crisis provides a lever for CIOs to get the most out of their strategic sourcing contracts by analyzing current spending and contract terms, establishing a cost reduction program and using suppliers as an extension of IT to achieve cost reduction goals. In addition to improving contract terms and reducing sourcing costs, the following strategies will help CIOs gain insight into how well the current supply base and contractual commitments support (or limit) IT's ability to deliver value to the business.

Review your sourcing contract portfolio.

The 80/20 rule typically applies to your contract portfolio, where 80% of your spending comes from a smaller number of significant contracts. Focus on these initially, as they provide the greatest opportunities for potential savings.

For your major sourcing contracts, you should review these key contractual terms.

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