Optimizing Supplier Relationships Perhaps moreso than their brethren in other industries, financial servicesinstitutions, particularly insurance companies, rely extensively onoutside suppliers for business operations.

What makes the situation highly complex for insurance companiesis the need to manage suppliers in two key realmssuppliers ofcontract labor, known as services suppliers, and suppliers toreplenish lost or damaged goods, known as goods suppliers.

Given the huge dollar amount that goes towards both services andgoods suppliers, competitive insurance companies need to streamlinetheir supplier relationships, “whittling down” their supplier ranksto include only the most high-caliber, readily available andaffordable resources, while wringing optimal cost-savings out ofcontracts with preferred suppliers. The actual accomplishment ofthis feat, however, is anything but simple, primarilybecause suppliers contracts tend to be departmentalized and notleveraged across insurance companies.

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