$21M cut from a top 10 pharma company's parcel spend, with no competitive bid

Parcel Rate Negotiation Parcel Pharmaceutical

Carriers:

FedEx

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WHO

Business model

A top 10 pharmaceutical company, partnered with one integrator for many years. Parcel was its largest freight spend, which made it the obvious place to start an extensive cost reduction initiative across the supply chain.

Industry

Pharmaceutical. A small group of very large shippers negotiating against a small group of carriers, which is what makes peer pricing so valuable and so hard to get.

PROBLEM

What they felt

Service was exemplary and, like all best in class companies, regression in service level was not an option. Yet they wanted to ensure its pricing was excellent and market competitive, and they had no way to know whether it was.

What we found

The challenge was renegotiating rates without a competitive bid from other carriers. Without a bid there is no market pressure, so the only leverage left is knowing what the carrier has already agreed to elsewhere. Knowing the rates of other top pharmaceutical companies is huge in this oligopoly.

WHAT WE DID

Prep and analysis

As with all negotiations, Trans-solutions built a baseline of cost from which to accurately compare each offer. With our proprietary software, Xact Negotiator, actual, not estimated, savings was known as a result of new pricing. We then benchmarked the shipper's pricing against other shippers with similar freight profiles, which provided insights in pricing not available to shippers.

Execution

That knowledge brought targeted concessions from the incumbent and immediate savings to the bottom line, without a bid ever going out and without the carrier relationship changing.

RESULTS

What they got

Over $21,000,000 negotiated, with no bid and no change in service

Trans-solutions negotiated savings of over $21,000,000.

They also kept the incumbent, kept the service level, and came out of it with a validated cost baseline and a benchmark position they can negotiate from next time. The savings were re-rated, not estimated, so the number held up against the invoices.

How much are you leaving on the table?

Get an instant calculation of your savings potential. Based on the database of carrier contracts we have audited and negotiated for 600+ clients since 1997, and on current benchmark data showing what companies with your profile pay today.

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