Case Study: Air Freight Contracting

The case

A major global manufacturing company was to renegotiate a few global air routes at a total value of some $500,000.

The approach

The negotiation was completely electronic.

The suppliers were qualified in accordance with the buyer’s quality and environmental demands. Different service levels were identified and quantified. Qualified suppliers could submit bids on the different routes together with price discounts for different combinations of routes (reflecting the suppliers’ synergies of getting certain combinations of routes). In the final price negotiation, the remaining suppliers competed interactively for the contract in several rounds.

The result

The result was beyond all expectations and a total saving of over 45% was achieved. All routes were contracted to a singel supplier who was one of the current suppliers.

The process was considered convinient and efficient.

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