In the past four days, we have explored our New Year’s resolutions. We are now ready to reduce spend, prepare for new projects, engage in that green initiative and prevent contract evergreening. The most difficult step in any resolution is to see it through for the year to come. Today, I will provide additional tips that can keep your procurement strategies fresh and beneficial.

Event Selection:

The selection and timing of your procurement events is an important factor in overall procurement success. Take the time to categorize your events based on level of complexity as well as spend dollars and you will find that you are able to maintain a mix of simple and complex events that keep your organization balanced and prevent overload.

Index pricing and renegotiation:

You will likely find that your contracts contain index pricing language. This might include Min/Max clauses and might even include caps to prevent your pricing from varying too much in a given timeframe. Monitoring your price changes as they occur will protect you against unjustified price increases and increases that are above the maximum levels allowed. You might also find benefit from monitoring the indices involved to ensure that you receive any applicable price decreases that you deserve.

By working with your strategic sourcing partner to follow the resolution enhancing tips from this series, you will enjoy a 2012 filled with procurement advances and greatly reduced spend.

Have a Safe and Happy New Year!

We look forward to and appreciate your comments.

One of the biggest causes of excessive cost we find is evergreen contracts. I find this to be a fitting topic for a New Year discussion as, just like the New Year, these contracts also follow on the tails of a year. Evergreening is the practice in which a contract automatically renews if no actions are taken. Often this renewal is at a premium. For more on evergreening, click here to go to the SafeSourcing Wiki.

Evergreening can be prevented using a two part approach. First, you may implement a contract management system that will monitor your existing contracts and notify you of upcoming dates, such as contract expirations. These notifications will allow you to take the appropriate actions to prevent evergreening.

Once you have received your notification, you can take the existing documentation from the contract management system and work with your strategic sourcing partner to develop this into an RFI, RFP or RFQ based on the specific needs of that project. This chain reaction caused by your contract management system will have allowed you to prevent your evergreen contract from automatically renewing, led to further procurement savings and did so with enough time to benefit from this process without interrupting your current source of supply.

In tomorrow’s post, we will consider tips that will help you stay the course with your resolutions.

We look forward to and appreciate your comments.

One of the biggest causes of excessive cost we find is evergreen contracts. I find this to be a fitting topic for a New Year discussion as, just like the New Year, these contracts also follow on the tails of a year. Evergreening is the practice in which a contract automatically renews if no actions are taken. Often this renewal is at a premium. For more on evergreening, click here to go to the SafeSourcing Wiki.

Evergreening can be prevented using a two part approach. First, you may implement a contract management system that will monitor your existing contracts and notify you of upcoming dates, such as contract expirations. These notifications will allow you to take the appropriate actions to prevent evergreening.

Once you have received your notification, you can take the existing documentation from the contract management system and work with your strategic sourcing partner to develop this into an RFI, RFP or RFQ based on the specific needs of that project. This chain reaction caused by your contract management system will have allowed you to prevent your evergreen contract from automatically renewing, led to further procurement savings and did so with enough time to benefit from this process without interrupting your current source of supply.

In tomorrow?s post, we will consider tips that will help you stay the course with your resolutions.

We look forward to and appreciate your comments.

In yesterday’s post, we took a look at a fairly basic concept that will pay out enormous dividends. In a nutshell, every procurement activity, regardless of value, should be approached using the same techniques that would be used for the highest priority purchasing initiatives. This includes RFIs, RFPs and RFQs. Now, the question becomes, how do you prepare your team for the challenges that lay ahead?

The answer is to develop a thorough plan. Working with your strategic sourcing partner, develop a strategy based on a proper category discovery session. Your partner will lead the effort to determine your plan based on the spend information that you provide and conversations with key personnel in your departments. Once this plan is in place, understand that this will become a living document that will continue to grow and evolve throughout the year.

In addition to your plan, you also need to enable your team and your strategic sourcing partner. Your partner has already assisted with the discovery process, so it is a natural extension to continue to keep them informed of changes to your plan. Now that you will be considering more of your company’s spend in your day-to-day efforts, your solution provider will also have to follow suit and provide additional support. At this point, you must develop and maintain an open line of communication between key players on each team.

Finally, you will want to prepare to share the good news. In order to keep your team motivated through the year, you might consider how best to share the news of your successes. You may choose monthly or quarterly reporting that will highlight cumulative savings dollars that departments or team members have ushered in using your procurement plan. Creating excitement will only lead to more success.

Tomorrow, we will touch on another resolution that is becoming more and more common and from which we can all benefit.

We look forward to and appreciate your comments.

In yesterday’s post, we took a look at a fairly basic concept that will pay out enormous dividends. In a nutshell, every procurement activity, regardless of value, should be approached using the same techniques that would be used for the highest priority purchasing initiatives. This includes RFIs, RFPs and RFQs. Now, the question becomes, how do you prepare your team for the challenges that lay ahead?

The answer is to develop a thorough plan. Working with your strategic sourcing partner, develop a strategy based on a proper category discovery session. Your partner will lead the effort to determine your plan based on the spend information that you provide and conversations with key personnel in your departments. Once this plan is in place, understand that this will become a living document that will continue to grow and evolve throughout the year.

In addition to your plan, you also need to enable your team and your strategic sourcing partner. Your partner has already assisted with the discovery process, so it is a natural extension to continue to keep them informed of changes to your plan. Now that you will be considering more of your company’s spend in your day-to-day efforts, your solution provider will also have to follow suit and provide additional support. At this point, you must develop and maintain an open line of communication between key players on each team.

Finally, you will want to prepare to share the good news. In order to keep your team motivated through the year, you might consider how best to share the news of your successes. You may choose monthly or quarterly reporting that will highlight cumulative savings dollars that departments or team members have ushered in using your procurement plan. Creating excitement will only lead to more success.

Tomorrow, we will touch on another resolution that is becoming more and more common and from which we can all benefit.

We look forward to and appreciate your comments.