We worked with a new client and their supplier to identify and correct a shortcoming in their processes which saved the client £20k+ per annum on their overhead costs.
The Situation
After carrying out a free bills analysis for a company involved in the automotive supply chain, we identified that they had been paying high out of contract rates for over two years and we advised that they should urgently be placed on a competitive fixed price contract to significantly reduce their expenditure.
We requested a quote from the incumbent supplier and were presented with a price based on the Transco Annual Quantity of gas used by the client (AQ) rather than actual/billed usage. Usually this would not be a major issue as the figures are generally similar, but in this case the Transco AQ was 1kWh and the billed usage was 1,000,000kWhs (1GWH).
In addition to this affecting the accuracy of the quotes, it also led to the client not receiving renewal offers from the supplier as the sales team saw no value in the contract. We firmly believed that had renewal offers been sent out, the Out of Contract (OOC) situation would not have arisen.
Our Approach
We expressed our understanding that the Transco AQ is often used to prevent clients / brokers inflating the usage to benefit from economies of scale on pricing and insisted that this was not what was happening. We directed the sales team to communicate internally with their billing department to establish an accurate consumption figure for the renewal quote, as at the time the client was being billed on actual usage to the tune of £50k per annum.
Meanwhile, we tendered the supply out to the broader market to ensure that through ourselves, the client had access to the alternative quotes necessary to make an informed decision and secure a competitive fixed price contract.
The Solution
We used the alternative quotes from the tender to negotiate down the initial renewal quote from the incumbent supplier, and went on to further challenge the supplier by highlighting that in their terms and conditions that they had a duty of care to the client to ensure that their service was fair handed and that by not holding accurate information across all departments, it had led to the client not being informed of his renewal, which had significantly impacted the client financially.
The Outcome
The challenge was successful and provided us with an extremely competitive renewal quote for the client using accurate billed consumption data that performed well against alternative quotes received from other suppliers in the market. The client also got a significant reduction in their annual spend (in excess of £20k) and with our continued involvement we have ensured the client will not be paying high out of contract rates again, as one of our main goals is revenue protection for our clients.
