How to maintain savings over time
Our latest whitepaper, Becoming best in class, introduces simple methods your organisation can utilise to achieve savings from your supplier base and best practices that can lead to maintaining savings over time.
This includes our top 3 essential negotiation tactics to help you negotiate more effectively.
Whether you are considering negotiations with an incumbent supplier or kick-starting the bidding process, review your organisation’s current needs and what products and services will be necessary to keep your organisation running smoothly.
Now more than ever, the need for organisations to develop a culture of cost reduction is paramount. Uncovering additional cash flow within your organisation can yield many important benefits and enable your business to reach new heights.
Whether you are looking to reinvest in your people, technology, marketing, or more – the extra money you save today can help you achieve what’s possible for tomorrow.
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“Now more than ever, the need for organisations to develop a culture of cost reduction is paramount.”
Understand your suppliers
In order to successfully negotiate favourable agreements with your suppliers, it’s imperative to understand how suppliers can glean profit within their contracts.
Whether you are considering negotiations with an incumbent supplier or kick-starting the bidding process, review your organization’s current needs and what products and services will be necessary to keep your organisation running smoothly.
It is also important to rely on industry benchmarking to ensure that the offer you’re receiving from a supplier is competitive. You can develop industry-specific benchmarks as well as per capita benchmarks to ensure that you are getting the best pricing as compared with your peers as well as compared to other industries.
By keeping your organisation’s must-have requirements top of mind, you’ll be able to articulate this during the negotiation process better. Providing suppliers with greater context can reduce their risk and potentially secure you with improved services (compared to their standard offer).
“It’s crucial to use the supplier knowledge you’ve gathered to secure contracts with improved pricing and services.”
Develop systems to prevent price increases over time
One of the most critical aspects of streamlining contracts is to designate one centralised department or facility staff member to maintain current contracts and check supplier invoices for errors, new fees or additional charges. This individual should also keep track of when contracts are set to expire so that they do not automatically renew at a higher rate and to give staff enough time to renegotiate a new contract or start the bidding process, if necessary.
Establish methods to monitor and maintain savings
It is essential to develop key performance indicators (KPIs) and monitor them throughout the contract’s term to continuously maximise savings over time. By establishing KPIs based on the cost-drivers of a particular service or supplier, your organization can track the trends and changes to determine the impact it will have on your organisation’s bottom line.