Renegotiation of a critical distribution agreement

Challenge

A communications equipment manufacturer sought to revamp its relationship with its main distribution and customer support partner. The renegotiation of this agreement was critical to the company’s success in strengthening sales efforts for both cloud- and premise-based products. To succeed, the deal would have to meet multiple objectives, such as quality of service to resellers and end-customers, operating costs, margin sharing, and motivating the chosen partner. As the client had limited resources to tackle such a challenge, New Harbor was hired to plan and direct the outsourcing and renegotiation process.

Approach

• Activity analysis: Identified and evaluated the wide range of services involved in sales, order administration, supply chain management and customer service – as well as the roles and process linkages between the manufacturer, distributor, resellers and end-customers within these activity areas
• Financial modeling: Developed a detailed, customer-by-customer model of all relevant revenue, margins and costs, to test sensitivity to key levers for both the company and its partner
• Playbook: Prepared a negotiating schedule to support specific objectives and a playbook, with clear guidance to all company participants, to ensure a well-organized, fact-based approach
• Negotiation leadership: Led critical aspects of the renegotiations while also coaching client managers to develop and exercise their own capabilities

Results

• Negotiations were successfully concluded, ahead of schedule and exceeding senior management expectations
• Relationship with the main distributor was fully respected and emerged stronger