Results

• After one year, a 2.72-percentage-point improvement on COGS was achieved.
• The commercial procurement team significantly improved its negotiation capabilities and gained confidence using quantitative methods throughout the negotiation process.
• An online digital platform was implemented, allowing buyers to access each of the 400 negotiation files with real-time data.

Initial Situation

• The Client is the market leader, with strong market share growth in 2019.
• The Client recognized it was not fully leveraging its relative market power to secure better commercial terms with CPG suppliers.

Project Objectives

Renegotiate the commercial term agreements with the top 400 CPG suppliers to help improve the company’s margin.

Methodology

EREA applied its standard supplier negotiation methodology:

• The company’s data was analyzed by our Analytics LAB, then classified to identify the total supplier contributions across the various Commercial Terms negotiated by the Client.
• A new negotiation strategy was jointly designed by EREA and the Client’s Commercial Purchasing Team.
• Comprehensive “negotiation dossiers”—including the new negotiation strategy generated by EREA’s Retail Analytics LAB—were created to identify imbalances in the commercial relationship between the supplier and the Client for each commercial term.
• The Client’s purchasing team was trained in preparing, interpreting, and using these documents as negotiation tools.
• EREA, together with the Commercial Purchasing Team, conducted negotiation rounds with the top 400 CPG suppliers.