{"id":2417,"date":"2008-01-28T20:11:00","date_gmt":"2008-01-28T20:11:00","guid":{"rendered":"https:\/\/www.certitrek.com\/nlpa\/2008\/01\/28\/cost-savings-multi-year-contracts\/"},"modified":"2021-07-29T10:58:30","modified_gmt":"2021-07-29T14:58:30","slug":"cost-savings-multi-year-contracts","status":"publish","type":"post","link":"https:\/\/www.certitrek.com\/nlpa\/blog\/cost-savings-multi-year-contracts\/","title":{"rendered":"Cost Savings and Multi-Year Contracts"},"content":{"rendered":"

I hope that you have enjoyed the article Calculating Cost Savings In Multiple Years<\/a>.<\/p>\n

Like many other cost savings topics, what I\u2019ve shared is a best practice among large companies but certain to be disputed by some in the purchasing and supply management space. So let me add these pieces of advice:<\/p>\n

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  1. If you report cost savings differently than the way described in the article and senior management accepts that \u2013 great! Don\u2019t change a thing. The whole point of reporting in the manner described is to gain integrity with senior management.<\/li>\n
  2. If you negotiate a fixed price throughout the multi-year contract, you may not be able to \u201cofficially\u201d claim cost savings in all years BUT you can still communicate your impact verbally. Something like \u201cIf we hadn\u2019t negotiated a reduction in price, our cost over the next three years would have been $300,000 higher.\u201d It may not be official, but it doesn\u2019t hurt to show your true impact.<\/li>\n<\/ol>\n

    Become a member<\/a><\/span>\u00a0of one of the world\u2019s largest procurement associations today.<\/span><\/p>\n

    Recommended Reading<\/b><\/span><\/p>\n