A $72m reduction in costs was quantified by changing the ‘rules of the game’ with the major retailers to avoid Dulux paying for the retailers’ errors



The Client's Challenge

Dulux, a paints manufacturer, was approached by both its two major retail customers to offer discounts based on the savings they would make from the introduction of paperless B2B trading with the retailers. A 3% price reduction was sought.

The customer could only identify $6m (1%) in potential nett savings. The board would not sign off on the B2B implementation project.


The end-to-end order – delivery – invoice – payment process


The value identification process

  • analyzed all of the process steps that took place between the vendor and retailer (as opposed to just the paper-based B2B transactions)
  • analyzed the retailer’s benefits and the drivers of these benefits  in order to get a holistic view of where the benefits lay and why
  • assessed the current processes’ problems and opportunities for improvement.

before producing a value proposition to support the B2B initiative.

The Results

The assignment delivered

  • a clear value proposition and detailed definition of the benefits of moving to B2B trading
  • a change plan and road map to enable, track and measure all of the outcomes, benefits and value to be realized
  • a negotiation document to be used with the retailers to ensure the benefits were realized
  • a business case for implementing the changes to allow B2B trading with the key retailers.

The Payoff

Over $60 million of previously unidentified savings were found by changing the terms of trade.

The ‘business rules’ the vendor would need to put in place with the retailers, and then monitor and enforce, were defined to ensure these benefits were realized. (Otherwise, the retailer could easily have increased the vendor’s costs)

We produced a ‘negotiation document’ whereby the sales force could intelligently and on an informed basis negotiate the terms Dulux needed while meeting the retailers’ discount requirements.

Dulux’s CFO and Sales Director, who had not believed the savings were possible, found the results extraordinary.

Explore The Value Equation™ Further

Read "TOP Thinking" blog posts on the Value Equation by clicking here.

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Topics: Value Delivery, Value Equation, Manufacturing, Dulux Paints