“Eliminate Evergreen Contracts – Resolutions Part IV of V”

December 29th, 2011

Today’s post is by David Wenig; Senior Account Manager at SafeSourcing.

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.

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