Most organisations review their supplier contracts when something goes wrong — a price increase, a dispute, a renewal deadline that crept up unexpectedly. By that point, the leverage is already gone.
The reality is that supplier markets move constantly. Pricing that was competitive three years ago often isn’t today , but unless someone is actively benchmarking it, the overpayment continues invisibly. It doesn’t show up as a line item called “waste.” It just shows up as a margin that’s slightly lower than it should be, year after year.
The pattern is consistent
In our experience working with New Zealand organisations across telco, IT, fleet, insurance, and beyond, the pattern is consistent: businesses that haven’t run a structured supplier review in the past two years are almost always paying above-market rates in at least one major category.
In some cases, particularly telco and IT, the gap between what a business is paying and what it could be paying runs to 50% or more. We have seen not-for-profits reduce their telco spend by over 60% and IT costs by 50% through a structured review and negotiation process. Not by switching to inferior suppliers. By knowing what the market was actually charging and going back to the table with that information.
Why does this keep happening?
There are a few reasons organisations end up overpaying:
- Contracts auto-renew without anyone checking whether the terms are still market-competitive.
- Internal teams are stretched. Renegotiating supplier agreements is time-consuming, requires market data most businesses don’t have, and rarely feels urgent until it is.
- Suppliers don’t volunteer savings. A supplier who is being paid above market rates has no incentive to tell you.
- The expertise gap. Knowing what to push back on, how to structure a negotiation, and what alternatives exist requires experience that most organisations only need occasionally but can’t justify employing full-time.
What a structured review actually involves
Identifying the gap doesn’t require months of internal analysis. It requires knowing what the market is actually paying and having the expertise and network to go back to suppliers with that information and negotiate accordingly.
A structured cost optimisation review typically covers:
- Benchmarking current spend against live market data across your specific categories
- Identifying which contracts offer the most leverage and upside
- Going to market or back to existing suppliers with a structured negotiation
- Verifying and documenting the savings achieved
The entire process is managed externally it doesn’t require significant time from your internal team, and under our performance-based model, it doesn’t require any upfront budget either.
Is this relevant to your organisation?
If you’re a CEO or CFO who hasn’t reviewed your major supplier contracts in the past 18 months, the answer is almost certainly yes. The question is not whether there are savings available it’s how large they are.
A conversation costs nothing. Finding out what you could be saving takes a matter of days, not weeks.
Alan Jennings is a co -founder of Xavient Partners, a Wellington-based commercial advisory firm. He has over 20 years of experience negotiating commercial contracts across IT, telco, and managed services, and holds a licence to operate under ERA Group, a global cost optimisation network with over 1,400 practitioners across 60+ categories.
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