On Renegotiating Contracts, Leases to Cut Costs - Modern Distribution Management

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On Renegotiating Contracts, Leases to Cut Costs

In today's conditions, everyone is looking for ways to cut costs. One of the recommendations made by experts is to renegotiate set contracts. (See what Alan Beaulieu had to say on the subject of renegotiation in Economic Forecast Places Start of Recovery in 2010.)
 
How realistic is this method in cutting costs? According to a recent article on WSJ.com, companies have been able to negotiate savings of up to 15% of their operating costs by renegotiating leases. If you're a good paying customer, there's a chance your suppliers will also give you a discount if you agree to terms that can also help them, such as ...
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In today’s conditions, everyone is looking for ways to cut costs. One of the recommendations made by experts is to renegotiate set contracts. (See what Alan Beaulieu had to say on the subject of renegotiation in Economic Forecast Places Start of Recovery in 2010.)
 
How realistic is this method in cutting costs? According to a recent article on WSJ.com, companies have been able to negotiate savings of up to 15% of their operating costs by renegotiating leases. If you’re a good paying customer, there’s a chance your suppliers will also give you a discount if you agree to terms that can also help them, such as paying in cash or with a check within a specified time period of delivery. But you have to ask for the change.

WSJ quotes a survey from the Small Business Research Board, that found that about 15% of respondents had renegotiated long-term fixed-cost supply contracts as of September 2008.

It comes down to a simple concept: Your suppliers and leaseholders would rather keep a reliable customer and continue getting paid than have to expend the resources on finding a new client without an already established relationship.

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