The Supply Chain Procurement Environment:
Contracting for Outsourcing

Speaker: Edward M. Lundeen, CPIM, C.P.M.
Director, Contracts Management
Iomega Corporation
[see biography]

Outsourcing is an excellent method for an organization to discontinue activities that are not part of its core competency, thereby permitting a shift from a fixed cost business model to a variable cost model, potentially reducing unit cost of performance and minimizing capital acquisition and ownership costs.

As organizations recognize and differentiate their core and non-core competencies, their ability to influence and impact their supply networks increase as they opt to outsource non-core activities and functions. Negotiating and contracting for outsourced business activities is markedly different from routine purchase or services agreements, especially if (for example) intellectual property, warranties, creative design, epidemic failure, liability and indemnification provisions are involved. Considerations regarding key performance indicators, metrics and service level agreements, as well as “exit strategies”, become contract critical.

We will examine the processes, mechanics and considerations specific to developing, negotiating and managing outsourcing agreements. Further, we will present concepts, methods, templates, tools and approaches to use when developing and negotiating outsource agreements.