During one long weekend, we decided to go for a hiking trip.

The onus was on me, to find a supplier (the tour operator) and negotiate costs as I was the partner contract governance head in my organization and my hiking group tasked me to do this task. If you are good, show us.

The task was slightly difficult as I had to find a supplier who would be ready to take us on a difficult, tough and risky journey at a short notice (less than one day). Time was not on my side as the departure was planned for next day and we were too dependent upon a single supplier.

However I convinced the tour organizer and the guide that we as a group are fit and healthy and with no special requirements in terms of food etc. The tour operator agreed to include us in his group and I also negotiated a reasonable discount since it was an additional revenue to him with no additional fixed costs.

In a negotiation, it is important to show that you bring value to the other party to make a deal.

We succeeded in being included in our first Hiking Trip to Mount Kenya.

During the four day hiking trip, I understood the cost driver components and would use it to drive down the costs significantly in our second trip to Mount Kenya.

In first trip, the tour operator found our group valuable with no additional costs to incur. We were expanding his revenue and his risk was minimal since we were fit and healthy to hike as we had experience in one day excursions.

In 2nd trip, I was the tour manager and resorted to insourcing. The insourcing led to significant reduction in the costs.

Understanding cost drivers in any procurement situation, helps leverage the component for a better decision.