H O M E

Contract Buying & Outsourcing - Cost Cutting Business Solutions

CONTRACT BUYING

• Leveraging your buying power, with a single source of supply, always obtains better pricing, terms and conditions.
• Instead of trying to monitor the performance of many suppliers you now monitor only one supplier who is more inclined to offer better service and if not can be easily appraised of their performance. "What gets measured gets done."
• Contract buying free's up manpower and therefore can reduce overhead costs.
• Contract buying can eliminate the "middle man" since placing an order is uncomplicated and time sensitive. Anyone in the organization can place an order, you no longer require a buyer since the transaction is a clerical task.
• Eliminates the need to "shop" for prices which is easily one of the more time consuming tasks that often yields very little (unless your sourcing for a short supply product). The contract usually contains a product price schedule that eliminates any and all communications other than availability.
• Contract buying eliminates "surprises", during the period of the contract your direct product costs are firm and the conditions known.

• Contract buying is a strategic approach since the goal is to reduce the amount of suppliers used for any one strategic product or group of strategic products. This more or less means that "all your eggs are in one basket." Usually the contract is for the supply of product(s) or services for a minimum of 6 (six) months. This approach does not obviate competition in fact the suppliers that did not win the contract tend to work harder for your business in anticipation of a further chance to win your business when the contract comes up for renewal.
• There is a written supply contract in place, signed by both parties. The contract stipulates terms/conditions and as important performance criteria. Often buy/sell process has changed to reduce costs and this is usually stated within the contract.
• The method of pricing and the pricing itself is well defined and usually firm for the period of the contract.

OUTSOURCING

• Customer contracts an outside source to provide the organization specific functions in Supply Chain Management. These functions may include all or part of the following: buying/negotiating capital and or operational goods and services inventory management, disposal of assets and expediting. Functions not included: receiving/shipping, storing/issuing inventory and inventory stock counts.
• The service provider is contracted to provide the outsource functions and is not considered to be an employee.

 Velocity provides a professional service and consistently operates in an ethical manner. We know how important good supplier relationships are to your company's success.

• Eliminate or drastically reduce direct and indirect staff costs.
• Customer is able to measure the performance of the service provider in a clear an objective manner.
• Customer has the option to provide or not provide: office space, office support, telecommunications, computers and peripherals.
• Customer can terminate, extend or change the contract, if necessary, at will.
• Outsourcing, as a contractual arrangement, which often promotes a higher degree of "customer service" since the continuance of the arrangement is based on a "pay for service/performance". Lines of communication and reporting relationships are less blurred and internal cultural issues are virtually non-existent.
• You can use outsourcing only when needed i.e. to supplement staff during peak times or for projects.

Velocity can quickly "come up to speed" by reviewing your purchases and the marketplace as it applies to your industry.