INTOUCH : Companies Waste Millions

An Auckland start-up business is on the lookout for companies which want to watch their spend and reduce their risk with suppliers.
Vendor Management – resident of the Icehouse business incubator – is looking for early adopter customer companies to help with the development and user-acceptance testing of software which aims to shine an early-warning spotlight on underperforming suppliers and contract management.
Vendor Management’s Cathy Adams says her ideal test companies would have more than 50 suppliers, and at least 10 people who need to access supplier information or are involved in contract creation or approval.
She says many organisations underestimate the resources required to properly manage supplier contracts and are not effectively managing them, which can result in significant dollar losses.
“As more companies feel the pinch there is an emerging recognition in the power of effective supplier management. Inefficient supplier management adds between three percent and 11 percent of hidden cost onto the P&L. For the average New Zealand company, with outsourced contracts worth, say $10 million, this means around an additional $300,000 to $1.1 million of unnecessary and hidden costs,” Adams says.
Too much focus is often placed on winning business and promoting customer service, whilst internal supplier engagement practices, ensuring effective contracts are established and the effect of the supplier performance on ROI, are rarely considered, she says.

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