A distributor of petroleum products is a midstream and downstream provider. They depended on a single supplier to provide mission critical fuel additives, such as jet fuel deicer and gasoline detergents, that are critical to their end product. The supplier was very dependable and offered value-added services such as checking tank levels and equipment, but continually demanded significant price increases without revealing the reasons behind the increase. Negotiations were impossible.
Feeling trapped in an uneven relationship with an unresponsive supplier, the company asked SGS Maine Pointe to provide an independent market analysis to either confirm that the company had no other choice or identify a strategy that might help them in the face of substantial price increases.
The petroleum products distribution company had several fears that had stopped them from considering alternative suppliers for the specialized chemicals they needed, including possible disruption to their supply chain, the loss of value-added services, and the cost to switch. The company also feared they lacked the scale to attract a direct-to-manufacturer relationship, providing further pressure to keep the incumbent who was a distributor.
SGS Maine Pointe had the subject market experts and structured process to challenge these fears. The SGS Maine Pointe team conducted an independent market analysis that identified six other additive suppliers, including direct manufacturers. They then analyzed and compared the different ways each supplier priced and transported additives and logistics, reducing the complexity of decision-making and establishing the pricing transparency that the incumbent had refused. They also broke down the myth that ability to deliver value-added services was unique.
The incumbent realized that there was a real possibility of losing their customer entirely unless they began to negotiate. The combination of negotiations and a second supplier resulted in a 43% savings.
SGS Maine Pointe delivered: