The provider had delivered a critical business service without interruption over a number of years. Our client had been satisfied with the quality of the service, until they discovered that an alternative provider could deliver exactly the same service at a fraction of the cost of the current provider. The relatively high cost of the service undermined the competitiveness of our client, who was themselves in the process of tendering to a key client. Our client needed a substantial reduction in the cost of the service and, needed it quickly, preferring not to change providers as the cost to switch was also very high.
We designed a process to communicate a vision and strategy for procurement that would be meaningful to stakeholders outside of the procurement function. This involved diagnosing the key issues and challenges facing the procurement team, understanding the cultural landscape, the key stakeholders, and their orientation toward procurement. We then workshopped the enablers and barriers to procurement’s subsequent evolution with some key stakeholders.
The service provider was at first, understandably, reluctant to embrace what amounted to a 50%+ reduction in revenue from our client. However, persistence and an inclusive approach secured cooperation and the provider eventually agreed to reduce the fees to the level requested. This negotiation was not 'just' about fee reduction, but also included changing the scope and standard of services being delivered. The lesson learnt is that negotiations take place within the context of a relationship, thus focusing the parties on the future and it's possibilities, rather than the past, will aid in significant movement during a negotiation.
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