How to Tackle Rising Supplier Costs Without Compromising Quality

Rising supplier costs are becoming an unavoidable reality for many organisations across both the public and private sectors. With inflation, supply chain disruption, and tightening budgets all biting at once, procurement teams are under immense pressure to deliver value — without sacrificing quality or service levels.

But cutting costs doesn’t have to mean reducing quality or cutting corners. The key lies in taking a structured, strategic approach to supplier and contract management — one that balances commercial performance with long-term relationships.

The hidden cost of letting things drift

Often, supplier costs don’t spike overnight. They creep. A small uplift here, a change in terms there, and before you know it, what once looked like a competitive contract is quietly eroding your margins or straining your budget.

In many cases, organisations don’t realise just how much value is being lost until a full audit is conducted. Common causes include:

• Automatic contract rollovers with baked-in price increases
• Lack of contract and supplier management
• Not policing SLAs and KPIs to realise service credits
• Missed rebate opportunities
• Scope creep or misalignment with current organisation needs
• Weak benchmarking or lack of market comparison
• Inflexible contracts not encouraging innovation, or utilising technological advances

If your team hasn’t reviewed supplier performance or cost competitiveness in the last 12–18 months, you may be paying more than you need to.

How to review and renegotiate — the right way

It’s tempting to jump straight to negotiation, but the groundwork is just as important. Here’s a structured way to approach it:

1. Gather and benchmark – Consolidate supplier spend data, contract terms, and service levels. Benchmark against similar providers or recent market pricing where possible.
2. Segment suppliers – Not every supplier requires the same approach. Identify strategic, critical, and transactional relationships to tailor your engagement.
3. Engage collaboratively – This isn’t about squeezing suppliers; it’s about realigning the partnership. Be transparent about your goals and open to creative win-win solutions (e.g. volume discounts, improved payment terms, revised SLAs).
4. Embed performance measures – Build in clear KPIs, SLAs, service credits, or gain share mechanisms to track ongoing value delivery.
5. Document and govern – Any new terms should be contractually embedded and reviewed regularly to avoid a return to contract and cost creep.

Knowing when to go to market

Sometimes, despite best efforts, a renegotiation won’t yield the outcomes you need. In those cases, a formal market engagement or competitive tender might be the right route.

This doesn’t have to mean a full-scale retender — it could be a mini-competition, framework call-off, or informal RFQ to benchmark against current rates and demonstrate value for money.

eXceeding often supports clients to weigh the cost and time involved in retendering versus working with incumbent suppliers. There’s no one-size-fits-all answer — it depends on the category, the spend, and the supplier relationship.

How we support cost control — without compromise

At eXceeding, we don’t believe in cost cutting for the sake of it. We work with organisations to optimise spend by:

• Providing independent supplier reviews
• Recent market, category and specific product/service knowledge
• Supporting negotiation and market testing
• Creating category strategies that reflect real organisational needs
• Managing supplier transitions (when needed) seamlessly

Our approach is collaborative, strategic, and always aligned to the bigger picture — not just short-term savings.

Is it time to take a fresh look at your supplier landscape?

If you’ve got a feeling your supplier costs have crept up — or you simply want to sanity-check whether you’re getting the value you should — we’re happy to have a no-obligation chat. Sometimes, a second set of eyes is all it takes to unlock significant savings. Just let us know you want to chat and we will get back to you.