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High street retailer

Retail faces some of its most demanding challenges in history, so when we were approached by this client, our doors were open.

The Brief

Major High Street Retailer

We were approached by a major high street retailer to support their packaging procurement. Buying in excess of £10m of packaging per year, it was critical to success that they were able to control their costs. Our objectives were to;

1

Improve the current commercial terms for packaging products by at least £0.5m

2

Minimise the impact of changes and disruption in the supply chain

3

Establish processes with suppliers to ensure our clients retained ownership of intellectual property in the products

Challenges

Understanding the constraints

The key challenge in this engagement was to ensure that the operating business was not disrupted, whilst not diluting the client's commercial leverage. The volumes consumed by our client, and the limited number of suppliers in this space, meant that any move or attempts to move from the status quo carried real risk. For example;

The existing terms did not leave this client exposed to commodity and currency fluctuations, all of which had moved against our client in the last 12 months

The large volumes meant that only suppliers with multiple production facilities were able to meet our client's requirements, significantly narrowing the supplier choice

The existing supplier had been in place for more than 10 years so change felt risky to many stakeholders

For some products the existing supply base believed that they owned the intellectual property on the designs

Outcomes

Results and Approach

Over a period of six months, the Insider team were able to improve costs by more than £1.5m whilst maintaining product quality and not impacting the customer proposition. To achieve this the team;

£1.5Million+ of improved costs in 6 months

Discovery

Investigated the wider market both in the UK and overseas to establish potential alternatives

Negotiation

Engaged the existing suppliers to renegotiate costs

Refinement

Adjusted the supplier/product mix to play suppliers to their strengths

Protection

Reset the commercial framework to calculate future costs and ensure that the client retains full intellectual property rights over the products being produced.

Inside Track

Minimising Impact

Successful businesses are built on successful supplier relationships. Often this can mean relationships are in place for more than a decade, with both customer and supplier coming to rely on each other. This is particularly likely in categories which are core to the customer proposition.

Whilst this closeness is generally positive and to be encouraged, it can sometimes result in commercial terms which are off market or a blurring of the lines over issues such as intellectual property. The Insider team were successful in this engagement by;

Expert Resource

Utilising knowledge from other customers
and the wider market to challenge
the existing terms

Simple Solutions

Applying their experience of handling complex
intellectual property issues to
ensure the client retained ownership

Management Team Engagement

Recognising that minimising change was
important operationally and delivering
a strategy which would not compromise
the client's commercial position

Featured insider

Greg Holtam

Greg is a Partner and commercial lead for the practice. With deep retail and manufacturing experience, Greg has worked with household names throughout his career and remains hands on in many of the businesses engagements.

Experience

Greg has worked with the following organisations

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