Becoming Best in Class
Original title: Becoming Best in Class: How to Maintain Savings Over Time
Open ERA Group's original report ↗The paper deals with how a saving is maintained over time. Its premise is that supplier contracts are normally written with the supplier's interests in mind, so it pays to understand where in the agreement the supplier actually makes its margin — through non-contract items, accessorial charges or termination clauses, for example.
Much of the material is devoted to practical negotiation perspectives: separating the negotiator from the relationship owner, articulating the organisation's genuine must-have requirements, helping the supplier reduce its own cost to serve, and using industry benchmarking to judge whether an offer is competitive.
The paper also covers the need for systems that manage future price increases, so a good outcome is not eroded during the contract term. The underlying point is that a strong supplier relationship and firm cost control are not opposites.
Key takeaways
- Understand how the supplier earns margin inside the agreement.
- Separate the negotiating role from relationship ownership.
- Use industry benchmarking to judge whether an offer is competitive.
- Build in mechanisms that handle future price increases.
Relevant for
CFO · CPO · Procurement
- Source
- ERA Group
- Language
- English
- Length
- 10 pages
Original material from ERA Group. JMF Europe provides a short summary here.