Case Study 4

Client: Listed Multiple Retailer and Distributor.

The client (a multiple retailer) purchased a complementary distributor with a view to achieving synergistic benefits. Both organisations had a team of highly experienced buyers but with no experience of managing and driving profit from a similar situation. As most of the team had been with the organisation for some years, they had little or no understanding of best practise in the market. Additionally, the suppliers were mainly branded manufacturers with high-power in their markets.

There were two key objectives.

  1. The client was pursuing an acquisition strategy – so it was important to have a methodology in place that could be applied to provide quick results in future acquisitions.
  2. There was already a very skilled team in place so there was a requirement for a “light touch” engagement – so skills transference was critical.

I met with the senior management and the teams to assess and agree the level of support that was required. Both buying teams were very receptive to outside help because the cost saving targets were very bullish. A number of the buying team had worked their way up through the organisation so they had little or no formal training – but they were clearly product experts. Although this industry is not highly regulated the client was determined that the buying team stuck to both the spirit and letter of current trading law. There was a lack of knowledge of the legal framework and the buying team were concerned about what they were legally allowed to ask suppliers for. I ran a seminar covering the main provisions of Contract law, The Competition Act, The Enterprise Act, The Enterprise and Regulatory Reform Act, and the GSCOP – so that the teams felt more comfortable that they could be demanding but stay on the right side of the law!

I worked with the teams to agree what in future would be regarded as best practice for negotiation and creating an annual cost reduction program.  Additionally, I worked with a number of the team members in the early stages of the negotiations to give them feedback and to help to embed best practice.

After the initial interventions I conducted short follow up reviews and provided telephone support.

The client is on target to deliver the financial objectives they had set from the acquisition.

The buying teams are now approaching the negotiations with more rigorous planning and this continues to deliver results.

The client has since acquired another distributor, and they are planning to conduct a similar program. They have asked me to work with the new team to embed the methodology and also to help the existing team with a number of strategic negotiations that are ongoing.