Standardizing high-tech buy pays off big for Delta
By Staff -- Purchasing, 11/19/1998 2:00:00 AM
Once a top-notch purchasing group finds the right suppliers, it makes sense to give them as much business as possible in return for certain guarantees. By signing agreements with two major suppliers of computers and related equipment, purchasing at Delta Air Lines was able to simultaneously cut costs and ensure that the company is supplied leading-edge technology.
About one year ago, purchasing at Delta signed an agreement with Hewlett-Packard Co. for all of Delta's workstation, printer, and server equipment for the next three years. Several months later, a similar agreement was reached with Toshiba America Information Systems, this time for purchasing all of Delta's notebook computers.
Prior to these two agreements, hardware was not standardized across the various business platforms in use at Delta Air Lines and Delta Technology. There was no system in place to control the cost of buying computer hardware or peripherals. By establishing the two agreements, purchasing used its volume to create superior pricing terms and lowered internal costs by simplifying inventory and support requirements.
Among the benefits of the agreements with HP and Toshiba:
* Pricing will never exceed the baseline price established at the signing of the contract.
* Delta can obtain new-generation technology at no incremental cost.
* Delta receives price discounts if equipment prices move below the established baseline.
* No minimum purchase requirements exist.
* An inventory spares pool consisting of workstations, notebooks, and printers is included, with no cost to Delta.
* Training for technology engineers will be provided at no incremental cost.
All listed provisions exceed normal terms, according to Delta. Also, all Delta employees can take advantage of the benefits of these agreements.
The agreements with HP and Toshiba typify what suppliers can bring to Delta, says Mike McHale, general manager--technology purchasing. "These suppliers came to the table with a plan that enables Delta to standardize our technology footprint, provide technically superior solutions, adopt technology upgrades with no increased cost, and substantially reduce both our acquisition and support expenses."
Delta Air Lines: Ringing up strategic gains
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