No. Our goal is to achieve savings with no supplier or specification change. If we see an opportunity to diversify or that a supplier is not meeting expectations, we will offer you alternative solutions.
With RTi’s proven track record of over 20 years, our largest volume processors achieved the highest savings. Volume doesn’t dictate price. Information and how it is utilized does.
No matter how unique your specification, the price-discovery process is still governed by prevailing supply and demand economics. There are alternate ways to negotiate price that go beyond simply replacing a supplier.
Resins are benchmarked before the agreement is executed. RTi has to improve on your pricing relative to the market. Example: If current price is IHS minus $0.05 and RTi was able to help achieve IHS minus $0.09 there would be a $0.04 improvement.
Indices provide pricing data that is often 30–60 days old and not reflective of current markets. RTi’s clients have access to real time market information because of our global network and 14 billion pounds of transactional visibility. The timeliness of our data allows you to quickly act, not react.
There are a variety of options to address this:
RTi understands that most of its clients don’t have incremental resources that are positioned to do extra projects. Therefore, RTi does as much of the heavy lifting as possible. We provide our clients with all the email responses to their vendors as well as copy for outbound emails to assist them in collecting data from their vendors. We can also create negotiation decks and provide negotiation strategies if needed. Typically, the majority of our client’s time is spent in the first 3-6 weeks of data collection. RTi also offers on/off-site assistance wherever possible to minimize our client’s time commitment.
RTi only gets paid when your invoice is lowered. All of our fees are paid out of your savings. We are only paid on realized savings—not projected savings. RTi prides itself on our no-risk, fair compensation system. If we don’t create value for you or an item is discontinued, we don’t get paid. We are successful only if our clients are successful.
RTi only gets paid out of areas where we create value. We do not get paid nor are we penalized for price movements in the raw material markets. Most contracts have price formulas based on raw material pricing. These formulas will stay in place, but the starting pricing point will be lower. Therefore, any future movements in raw material prices are nullified when calculating savings for our compensation.
Typically, any spend over $3 million in a single category is worth reviewing. Any single supplier contract should exceed $1 million.
It is best to engage when the current contract is within 6-9 months of expiration. If major savings are identified, contracts can sometimes be pulled forward for negotiations.
Per specific language in our contract, the client is not obligated to follow any of our recommendations. The client makes all decisions regarding negotiated pricing and/or selected supplier(s).
This is highly dependent on the complexity of spend, the category being examined, and the level of detailed specification data available. Corrugate is typically the quickest category to benefit at 3-4 months. Other more complex categories, like rigid or barrier film, can be 6-9 months.
Yes. Every item within the purview of the contract being negotiated is cost modeled and a target price is applied. This is critical in guiding the negotiation strategy.
It is based on our 10 years of experience in specific markets/categories. Our economic benchmarks (supplier margins applied to cost model to create target pricing) are what RTi has continuously been able to achieve in individual markets by category. For example, within the protein markets specific to barrier film, we have been able to consistently achieve 25%–30% targeted supplier margins. The key success factor in positioning item-level target pricing is having a credible/profitable target that the incumbent supplier knows his competition would accept if offered.
Our typical engagement model is to be behind the scenes, unknown to the supplier. We work in close collaboration with the procurement team throughout the negotiation process. If specifically requested by the client, we can participate or take full ownership of negotiations.
“Best In Class” suppliers always respond well to open and honest conversations based in facts. Our fact-based negotiation process fosters a more strategic relationship with your key suppliers. Vendors are able to enter into long term contracts at sustainable, fair margins that permit them to reinvest in the business. However, there will always be suppliers who don’t want to have honest conversations because the margin they have been enjoying is far higher than they have disclosed.