Results at a glance
- Projected Total Savings versus current contract of 24.3% on spend of $18 million USD annually
- Optimized rise and fall pricing formula ensuring a successful longterm partnership
Challenge
A global ERM company faced with fierce external pressures from commodity prices, needed to find incremental savings in their air charter contracts. With an annual air charter spend of $18 million USD, the company had a longstanding relationship with their incumbent supplier and had not been to RFP in almost 10 years.
Prior to approaching CWT Solutions Group to manage the request for proposal (RFP), the incumbent supplier proposed a bid avoidance to our client proposing price increases across all markets. With historical challenges of limited supply in the region, the client was concerned that there would be minimal opportunity for savings.
A long-time client of CWT, the company’s procurement team reached out to CWT Solutions Group to help determine the opportunity of going to RFP and how Solutions Group could support in their efforts.
Our consultants took a detailed and custom approach, assessing the past twenty years of macroeconomic indicators, to create custom forecasting projections and a competitive analysis to determine potential opportunity. With the CWT Solutions Group insights and experience in hand, the ERM company made a well-supported decision to approach the market for a competitive pricing exercise.
Solution
Working closely with the client to develop a tailored strategy, Solutions Group aligned with the client’s operational, commercial and community care objectives of the RFP.
With multiple mine sites to service, internal stakeholder priorities from each site were consolidated and incorporated into the project success plan. Assessments were made of supplier management structures, technical capabilities, health and safety standards, and long-term financial health.
Our consultants gathered, cleansed, and consolidated the client’s data with enhanced market-related metrics. Pairing this information with short-term and long-term risk assessments allowed the team the ability to determine risk mitigation solutions. On the commercial front, Solutions Group developed comprehensive market insights through a competitive analysis against the client’s current pricing, budget, and market indices.
Utilizing a proprietary forecasting system, our Solutions Group dynamic negotiation tools allowed the client to easily forecast long-term financial impact figures during supplier negotiations. This advantage supported a strong face-to-face negotiation, resulting in on-the-spot pricing evaluations and decisions. Dissecting the elements that contribute to supplier operational costs, Solutions Group was able to find multiple avenues of negotiation potential, leading to a layered approach to reach ultimate savings potential.
Results
Combining both operational and commercial objectives, Solutions Group was able to facilitate a mutually beneficial pricing solution while meeting all site stakeholder technical requirements. This resulted in a 24.3% reduction in charter pricing versus our client’s current contracts. This greatly exceeded the initial expectations of the client and adds to a long list, of very happy customers.
The Bonus
As part of Solution Group’s ongoing work to support people, profit and planet the client’s objectives around community care were a major priority to consultants throughout the sourcing exercise. With mine sites located in remote regions, the local community near the sites greatly benefit from access to spare charter seats. Knowing the opportunity of mobility is vital to the wellbeing of the local communities, our Solutions Group Consultants made it a top priority to ensure charter airlines would accommodate and support the allocation of unused charter seats to locals. Solutions Group was able to find a resolution to this community care objective without any sacrifice to the financial results.
