Mega Negotiations Story
Here is a story about a strategy we used which I called mega-negotiations. We were very lucky that all the elements fell in place and we had hungry suppliers. The size of the negotiations gave us strong leverage.
These were the ground rules we established for a $5 billion dollar bid of supplier work for major expansion of chemical plants.
1. There would be only one
round of bids. We urged the suppliers to give the bid their best shot. We
didn’t have the time to manage multiple bids.
2. We announced that we would,
in many cases, narrow down the areas where we had two preferred suppliers to
one, unless we had a good business reason for keeping two.
3. Although
we had negotiated some significant total-cost-of-ownership savings in the
current contracts, we were open to enhancements from the suppliers and
distributors.
4. We told
the suppliers that we would not accept their standard spare parts packages as
we had in the past. We would challenge their typical spares packages, but would
be especially open to creative ways of them controlling and managing the spares
at minimal or no cost to us.
5. OEMs (Original Equipment
Manufacturers) could work with distributors to propose any additional creative
services to provide us.
Believe it or not we saved over $1 billion with
this approach. We were stunned.
Dr. Tom DePaoli www.apollosolutions.usContact Dr. Tom = thomasdepaoli@yahoo.com drtombooks.com for newsletter sign up https://drtombooks.com/contact/ My Books link: https://www.amazon.com/Tom-DePaoli/e/B003XSV1IQ
No comments:
Post a Comment