Success Story - "Packaging Materials"
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Company Description
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$5 Billion B2B Hardware/Software Supplier
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Company Situation
and Problem |
The client was purchasing materials from a distributor who had installed
“free” equipment in exchange for purchasing related supplies. The buy
included other standard products which could easily be purchased elsewhere.
The current distributor manages inventory. The client had previously
solicited bids every two years and believed their “supplier partner” was
competitive.
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| Paladin Actions & Recommendations |
Using a feedstock index, Paladin demonstrated that the client had been
paying a 10%-15% premium, versus what the index would have predicted, over
the 2 year life of the contract! Paladin’s sourcing process included:
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Pre-bid meetings with the incumbent supplier and prior unsuccessful bidders
to signal a change in the sourcing process. |
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An electronic RFI to a broad audience to determine potential suppliers’
capabilities, to gather information on various alternatives, and to collect
feasibility level pricing. |
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An electronic RFQ with final lots and detailed, accurate item descriptions
to evaluate bidders against non-price criteria and to determine total best
value. |
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| Client Results |
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Incumbent supplier dropped their prices 20%! Split award. Alternate bidder
awarded significant volume raising savings to 24%. |
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No switching costs since “free” equipment is owned by the manufacturer not
the distributor. |
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Implemented P-card for additional savings and efficiency. |
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Tied price movement to feedstock index. |
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Contracts require quarterly reviews to address potential non-price cost
savings. |
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Renegotiation of Contract with existing
Vendor provided over 20% cost reduction with no disruption in service. |
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