After a decades long relationship the client wanted to test the market in a very sensitive area of supply: the delivery of cash and maintenance of a retail bank’s ATM network. The current service was deemed to be satisfactory.
Firstly, the specification of requirements was redrafted to push the industry harder than previously. Specifications were drafted to be a performance specification rather than based on supplier inputs. Peripheral suppliers were asked to form alliances to improve the competition in the market place. A full scale RFP was executed, and numerous rounds of commercial and contractual negotiations took place.
To improve the overall availability of ATMs, while reducing costs, improving maintenance turnarounds and retaining relationships, all under very tight timescales due to exit clauses within the existing contract.
An alternative supplier was, after a great degree of internal persuasion, selected to perform these critical services. In excess of £1m (13%) costs savings were delivered and availability of cash, as measured by the industry authorities, rose from “bottom of the league” to second place overall.
Competitive threat is the most powerful tool available to organisations to influence supplier behaviour. Organisations are often too passive in not creating and promoting competition in their critical supply areas.
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Jim Willshaw (MBA, MCIPS, MIIAPS)
Jim is an experienced procurement professional acting as a consultant, speaker, coach and trainer to leading organisations all over the globe.
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