large scale strategic negotiations

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Overview

This is our favorite part of our job. Preparation is everything and we do our homework. Whether negotiating a major equipment purchase, several long-term supply contracts or a master service agreement, we have you covered. We are passionate about getting to a cooperative solution with our strategic partners that eliminates "dead weight loss" and we frequently engage in secondary negotiations post primary negotiation to ensure we get to a collaboratively optimized solution. We understand that business is a long game and that developing truly collaborative strategic partnerships can be a lasting competitive advantage.

CASE EXAMPLE

6-Month Project: Planned negotiations for $6B Airforce contract, identifying $1B savings from labor, material and SG&A throughout the very complex aircraft supply chain


Situation

  • Prime supplier was proposing cost increases on 60 year-old aircraft to USAF
  • Manufacturing of the aircraft was highly complex, with parts from hundreds of tier 1 & tier 2 suppliers and thousands of engineers and assembly workers
  • All suppliers were highly reluctant to accept any cost reductions due to cost plus margin structure within government contracts

Approach

  • Developed detailed fact base using bottom-up rebuild of aircraft
  • Analyzed Tier 1 and Tier 2 supplier proposals, benchmarking against government and commercial applications
  • Traveled to supplier sites to develop "should cost" models 
  • Conducted time studies and shop floor visits to identify value engineering and outsourcing opportunities
  • Analyzed spans of control and layers against commercial companies to develop an indirect labor optimization package
  • Convinced Prime supplier of mutual value created through the process and trained counterparts on how to use the robust framework for future supplier negotiations
  • Supported Secretary of Airforce in direct negotiations 

Impact and Results

  • USAF captured $1B in savings on a $6B contract (17%), ultimately reducing tax payer liability
  • A more collaborative relationship with the prime, with added value from proving efficiency advantages when selling to foreign allies