Monopoly supplier and shortening of delivery terms
One of the largest European manufacturers of freight wagons found itself in a situation where it purchased a key component for its tank wagons from only one supplier. This supplier had a monopoly position on the market – it was the only manufacturer of the specific component in the required quality. This meant they could freely dictate prices and lead times. The wagon manufacturer had no alternative and had to accept constant price increases and long waiting times for deliveries.
What were the main problems?
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Monopoly supplier – without an alternative, there was no possibility to negotiate better terms.
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Long lead times – waiting 10 to 12 weeks complicated production planning.
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No flexibility – the wagon manufacturer was unable to react quickly to changes in demand.
What did PARTORY do?
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Analyzed the market – we identified possible technological alternatives that would allow the production of the component outside the dominant supplier.
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Found a second manufacturer – we established cooperation with a new supplier who was able to offer the same quality at more favorable terms.
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Shortened lead times – the new supplier managed to dispatch components in 4 to 5 weeks instead of the original 12.
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Created competitive pressure – even the original monopoly supplier started offering better prices once they realized they were no longer the only option.
What was the impact?
Thanks to this strategy, the wagon manufacturer:
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Reduced costs for the key component, as suppliers had to compete for their orders.
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Gained flexibility in deliveries, allowing them to react faster to market needs.
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Shortened production cycles, because the new delivery terms allowed for better production planning.