Regaining Negotiating Strength When Sole Sourced

Challenge

Leading company in the manufacture of coolers had become sole sourced with proprietary formula of 2 part polyurethane insulation with blowing agent. This relationship extended over 20 years with the advantage eventually resting with the supplier who simply announced price increases.

Solution

-Research the market to identify historical alternatives.

-Identify potential new entrant that was in closely related technology.

-Attempt to negotiate with long standing incumbent who refused to change pricing.

-Initiated visible development strategy and in-plant testing protocols while incumbent vendor engineers were on site.

-Developed theoretical pricing from future vendor.

-Re-opened negotiations with incumbent vendor who knew of credible, strategic, alternative.

Results

Incumbent vendor withdrew 3.5% price increase, committed process engineer to audit process, train operators, and recommend improvements. Reduced previous price by 18%.