Supplier dashboard: what to check before renegotiating a contract

Negotiating without the numbers already worked out

Before sitting down to renegotiate a contract with a supplier, someone usually asks for "the numbers on this supplier" the day before the meeting. Most of the time those numbers do not exist together anywhere. They are scattered across the ERP, the invoices and some spreadsheet someone in purchasing updates when they get the chance.

The result is that the negotiation ends up resting on a general feeling that the supplier keeps raising prices or delivering late, instead of on verified figures. These are the numbers that should already be calculated before walking into the room, not during the meeting.

1. Actual spend with the supplier over the last twelve months

The first number sounds obvious and is almost never on hand exactly when it is needed. How much has actually been spent with that supplier over the last year, and how that compares with the year before.

The trend matters more than the total. A supplier whose volume has grown thirty percent without anyone deciding that on purpose is a different conversation from one that has stayed flat. Without this number, the negotiation already starts at a disadvantage.

2. The gap between the agreed price and the price actually paid

Looking at the signed contract is not enough. That price needs to be compared against what has actually been paid invoice by invoice, because increases tend to creep in gradually, through small orders or line items that were never part of the original negotiation.

When that gap builds up for months without anyone adding it up, the supplier walks into the renegotiation already knowing something the company has not yet worked out.

3. Orders delivered on time and in full

The share of orders that arrive on the agreed date and with the full quantity is another number that usually lives in the memory of whoever receives the goods, not in a report. Everyone knows "that supplier delivers late" without being able to say how often, or since when.

Seen month by month, that percentage is what turns a general complaint into a concrete argument for negotiating lead times or penalties.

4. How much of the category spend this supplier represents

How much this supplier accounts for out of the total spend in its category, say raw materials or logistics services, changes the negotiating room completely. A supplier that concentrates seventy percent of a category's spend is in a very different position from one that represents ten percent and could be replaced without much risk.

Without that percentage worked out, it is easy to negotiate as if every supplier carried the same weight, when that is almost never the case.

5. Spend that falls outside the contract terms

Rush orders, one-off purchases outside the master agreement or extra items added along the way tend to add up to more than they seem at first glance. That off-contract spend is rarely reviewed as its own block, and it is usually the one with the most room for improvement in a renegotiation.

Seeing it on its own, not mixed in with the rest of the spend with that supplier, is what makes it possible to ask for different terms on that specific kind of order.

What to do about it

None of these five numbers requires building a new purchasing system. They almost always already exist in the ERP, the invoices and some spreadsheet someone maintains by hand, they just have never been brought together in one place before a negotiation.

I automate exactly this kind of dashboard. The first meeting is one hour and free of charge, and it is there to see how much of these five numbers your company already has available before the next renegotiation.