The client was renegotiating an annual supply contract with a large supplier that set a contract price based on faulty assumptions on upward annual price reviews. The client also faced similar contracts with other suppliers. ENS conducted a three-day training program where the ‘Range’ concept was discussed. With knowledge gained from the training, the client secured $30,000 in annual savings on the contract.
Faulty assumptions, Limited options
An annual supply contract with a large supplier was made based on assumptions on the client’s ‘normal’ acceptance of upward annual price reviews. The ENS client was faced with a ‘this is our final price, and you’ll have to accept it’ ultimatum. Moreover, the client also had similar contracts with other suppliers who held monopoly or semi-monopoly in their industry. This gave the client limited options for renegotiating the contracts and made them seemingly powerless against perceived monopolistic suppliers.
Empowerment through ENS Training
ENS conducted a three-day training program for the client’s key personnel. The team members had highly variable experience, but the discussions revolved mostly on examples from their organisation. ENS introduced new concepts and frameworks for negotiation including the ‘Range’ concept. Initially, there was some reluctance in using some of the techniques in negotiating with their (semi)monopoly suppliers as no one had directly challenged th em before. However, one of the senior team members perceived the benefits they may gain in testing the limit of the walk-away price.
Significant savings through successful renegotiation
With the knowledge gained from the ENS training, the client successfully renegotiated their contract and secured $30,000 in annual savings on a ‘standard’ contract. Most importantly, the senior team member who led the negotiation gained enormous confidence in using the techniques learned from ENS. Other supply staff members were also encouraged to continue using the techniques in future negotiations.