How do you know when you’ve reached the best deal? We’ve found the average-sized business has anywhere between four and 10 substantial supplier agreements needed to keep their organizations operating. The bigger the business, the larger the number of vendors. The more vendors, the more demands on procurement specialists challenged with negotiating these contracts – often with limited visibility or familiarity.
Typically, deal makers are inclined to own their supplier relationships, using their internal knowledge of the firm: requirements, challenges, negotiations, and legal terms. On the face of it, the system seems efficient. However, over the course of almost 3 decades negotiating contracts for organizations with their key vendors, SRM has developed two key pieces missing from the model that can strike the optimal deal: benchmark data, and the expertise to leverage it.
The value of this type of experience is best expressed in this quote by Jim Gray, Chief Revenue Officer at Renasant Bank, “From an annual savings standpoint, SRM has brought anywhere from $50,000 to $1.5 million in savings on single projects per year.” Each year, year after year, Renasant’s partnership with SRM has allowed them to deliver more value to their stakeholders.
The Power of Benchmarks
Gathering benchmarking data is a continuous process. Indeed, few procurement departments are staffed allowing for time to stay abreast of the going rate for X service for Y sized organization.
For example, SRM addresses this need by maintaining a proprietary database updated in near real time from organizations across the map, enabling clients to make key decisions that level the playing field.
When negotiating with a key vendor, when you have the means to weigh competitiveness of the terms on the table, the outcome is strategic value – 100% of the time. After all, information is power.
The power of that information delivers tangible value that executives such as Ches Jackson, President of Supply Chain Management at Monogram Foods can then use as evidence of value derived from the SRM partnership, “SRM delivered on its promise. I don’t think we could have found these savings without the help of SRM. Their cost benchmarks and product knowledge have helped us deliver strong financial growth to our investors.”
A Fresh Pair of Weathered Eyes
As if the demands of piloting an organization aren’t enough, executives are now expected to know the latest on what new technologies will increase efficiency, and what suppliers are offering – or will offer in the future.
True, it is impossible for one person to know everything. However, while there is no shortcut for professional subject matter expertise, a second set of eyes is always an option for greater perspective.
To this end, the next time a critical supplier deadline becomes a pressing matter, and internal resources are up against the odds, consider seeking out an initial analysis from a resource that has seen it all.
At the end of the day, results are what count. SRM has helped over 1,000 clients achieve more than $2.2 billion in value through Contract Value Optimisation and is now available on the ground in Europe, set to deliver success through our team at SRM Europe. To help you identify opportunities, we offer initial assessments with no fee. Once engaged, SRM’s performance-based business model allows a cost-effective and non-disruptive approach for reviewing options.
That assessment could mean all the difference for your bottom line in the coming year. For Todd Brown, Chief Financial Officer at Teachers Credit Union, having SRM assess his position with key vendors was a game changer, “I don’t think people realize how much money SRM can actually generate. Just the first project made a huge difference to our bottom line.”
The Bottom Line
If your goal is to have a grip on your contract management efforts, we recommend these questions:
- Do you have time to amass the subject matter expertise required to know your vendors?
- Are there resources to assemble and maintain a database of market and vendor pricing?
- Does your procurement department have a partner with expertise to make them effective?
How may we help you?
Contact us for an initial assessment or email us at firstname.lastname@example.org.