Strategic Sourcing
- Contractor Re-negotiations: An oil and gas client needed to renegotiate the terms of a multi-billion dollar agreement with a contractor, and was starting from what they perceived to be a relatively weak position. Using Strategic Gaming, we showed how the balance of power could be shifted with a comprehensive approach that drew on levers revealed by our analysis. These included ways to extract key cost information from the contractor and, in one particular circumstance, a threat of “mutually assured destruction.” In addition, we helped specify terms that would reduce our client’s disproportionate and high risks and create more of a win-win. We also provided a detailed strategic and tactical dynamic road map to support swift and successful execution of this comprehensive approach.
- Procurement Strategy and Negotiations: An oil and gas major was faced with repeated price increases on short-term contracts from a key supplier. With 75% increases over the previous 3 years, more on the horizon, and a near-monopoly position for the supplier, the client felt it was at the supplier’s mercy. Using Strategic Gaming, we showed the client that it was actually in a strong bargaining position – the supplier had few other alternatives and other suppliers could be brought in to partially displace the key supplier over time. In addition, a creative plan was developed to do away with short-term contracts and constant price increases by bidding out the work under long-term contracts to several suppliers. By changing the game in such ways, the client could save more than 10% and avoid constant renegotiations.
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