Laundry services for company branded clothing had historically been provided to employees by the client. Over time, the cost to provide the services separated from the value the service provided & the client was unable to find a suitable solution with the incumbent supplier due to the restrictive nature of the contract. Spend Solution was engaged to review the spend category & provide a sourcing solution that would provide greater value for money.
Spend Solutions conducted a thorough review of the existing supply arrangements as well as assess alternative supply options. At the heart of the issue was the restrictive contract terms that meant costs were fixed regardless of volumes. Spend Solutions also identified that the garment ownership model had changed over time however was not reflected in the new commercial terms. With an automatic 3 year rollover clause in place & the contract soon to expire, Spend Solutions had to act fast however was able to develop a winning negotiation strategy that would deliver immediate, sustainable results.
Using competitive tension, Spend Solutions was able to negotiate much improved commercial terms that better reflected the clients needs. These included removal of restrictive contract terms, no minimum volumes & renegotiated pricing based on pre-purchase of garments.
Overall, the client was able to save an amazing 70%, while significantly lowering commercial & contract risk.