A thorough negotiating strategy can make the difference between an agreement that falls apart and a long-lasting and profitable relationship. BSI assists buyers and suppliers in negotiating thorough and comprehensive win-win agreements that survive the duration of the contract term and into multiple renewals. We provide external benchmarks, objective company-specific analysis, and challenging but realistic cost, productivity, and process improvement targets. We also apply unique and proprietary risk models to determine the optimal contract term, the optimal supplier split, and the optimal geographic production split over time.
We blend world-class technical product and service knowledge, economic expertise, and a proven negotiating framework to add value to any long-term agreement.
Click here to inquire about our contracting support services.
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Procurement professionals are responsible for some of the most strategic liabilities at their companies. Yet oftentimes little science or methodology is applied when structuring contracts with major suppliers. Boston Strategies International offers actionable recommendations based on proven optimization models related to contract term, supplier split, and regional supply focus.
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| Custom Metrics and Benchmarks |
Due to rapid growth in certain industries and regions, supply market analysis is key to procurement today. For example, the steel scrap market worldwide is growing between 120-140%, extending lead times and causing price volatility. Buyers need market analysis and forecasts to gauge lead times and structure supplier negotiations. Boston Strategies International offers custom supply market outlooks for over 300 commodities worldwide.
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Custom Benchmarks
Transportation
equipment manufacturers are saving 21% by sourcing globally. Plastics companies are saving 10% by partnering with core suppliers. Electronics firms are saving 13% with long-term agreements. How much are you saving? This customized benchmark provides a thorough and concise audit of your strategic sourcing emphasis, scale leverage, results, and balance. You complete a 1-page form, and you get back a 4-page report with 156 benchmarks (see example). Based on our database of over 10,000 savings benchmarks for 12 strategies in 15 different industries, 14 commodities, and 4 company size ranges.
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- Industry:
Electric and Gas Utility
- Key
Challenge: Regulated industry structure had sheltered suppliers from
competition for years
- Why BSI
was Selected: Track record of impressive savings from sourcing projects
- Project
Scope: Six operating companies with 47 stocking locations
- Project
Approach: Analysis of spend, preparation of negotiating strategies, face-to-face
negotiations, contract awards
- Operational
Benefits: 75% reduction in the number of suppliers
- Financial
Benefits: 24% savings on purchased materials
Click here to read the full
case study on Negotiation Support.
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| Selected BSI Articles on Contracting |
| Energy Price Volatility and How to Avoid it Through Better Contracting
Oil price shocks cause extended supply chain disruptions, resulting in inefficiencies at producers, refiners, equipment OEMs, and component suppliers. Oil companies pay higher equipment prices than they otherwise would. Equipment OEMs make excessive capacity investments that are underutilized when the market turns down. And component suppliers are left holding excess inventory when the bubbles burst.
Please click here to download our article, which offers tips for structuring long-term contracts that minimize these costs.
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| Contracting Risk Exposed in the Deepwater Horizon Blow-Out
The explosion at Deepwater Horizon has resulted in the loss of 11 lives, over $2 billion already spent for cleanup, and forecasts of total costs reaching as much as $60 billion. Best-in-class supply chain management practices could have prevented the disaster by establishing accountability as well as foolproof, transparent and reliable interfaces among all actors throughout the drilling lifecycle.
Click here for a memo on who was at fault.
Click here for a memo on the supply chain lapses.
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| Contracting in a Volatile Market (2009 Strategic Sourcing Study)
Volatile oil prices have wreaked havoc up and down the supply chain for oilfield equipment, indicating the need for new supply agreement methods to balance this risk. Boston Strategies International used a supply chain simulation model to quantify how much value is lost when the price of oil spikes and freefalls. Part of the answer is political in nature, but equipment buyers and suppliers can mitigate the problem through “very long term contracts” (VLTCs) that share risk and maximize flexibility. VLTCs require a different way of looking at the buyer-supplier relationship and flexible mechanisms such as indexation of cost and prices, layering of incremental requirements onto a base load, and providing the option to reserve capacity.
Click here for free download.
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To request more information on our firm or our products and services, please click here.
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