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.
During the preparation of negotiating strategy phase, 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.
During actual face-to-face negotiations, we bring experience and credibility to the table on your behalf.
Overall, engaging BSI for negotiation support blends world-class technical product and service knowledge, economic expertise, and proven negotiating talent to achieve measurable results.
BSI offers negotiation support through our proven and proprietary frameworks, combined with our deep industry knowledge, that ensure you are fully prepared for meetings and communications when they occur. Consideration is given in a fully documented work plan, to factors such as:
- Timing and sequence of negotiating events
- Number of rounds and type of discussion to be had at each stage
- Optimal level of depth to be addressed at each stage to achieve the desired end state
- Price and non-price strategies for win-win agreement
- Monetization of risks, including unique risks such as currency inconvertibility, local content requirements, quality gaps, and untimely release of milestone payments.
- Identification of high-value leverage point
BSI offers full-service outsourced negotiation services, as needed. Our experienced industry experts are supported by a “back office” of technical experts and analysts to ensure preparation for previously identified and hypothetical issues.
Many of our senior consultants have over 30 years of experience in their respective domains. For illustrative experience base of our core team, click here to visit selected BSI Staff Profiles.
- 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.
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.
Contracting in a Volatile Market (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.
Sometimes You Get What You Pay For
Everything costs money, so there are no “bargains.” You get what you pay for. If you want to get something cheap, you can. The trick is to get something that is uniquely valuable to your operation for the price of a commodity service. In order to get off the standard price: service curve, you need two pieces that are not readily available: 1) what should the target service profile be?, and 2) what should the price be for that service?
Please click here for free download.
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