Turning Tail Spend into Profit: The AI Negotiation Factory in Action

Unlocking 1–3 % Savings Across ‘Too Small to Manage’ Suppliers

Procurement teams in trade distribution often face a structural challenge when managing extensive supplier bases. With limited capacity, effort is naturally concentrated on a small group of high-value or strategic suppliers. As a result, lower value “transactional” suppliers are deprioritized and managed with limited commercial scrutiny.

This creates a persistent blind spot. While individually small, these suppliers represent a significant share of spend in aggregate, yet stretched procurement teams lack the bandwidth to engage them effectively using traditional negotiation models.

Our client, a major building materials distributor, managed hundreds of direct suppliers with individual spend levels below. Historically, the economics of manual negotiations meant this long-tail spend segment remained largely untouched. To change this equation, the organization introduced a GenAI-enabled negotiation model designed to deliver scale without sacrificing governance or quality.

Industries
Retail
Expertise

// Approach

A Scalable Model for Tactical Supplier Negotiations

Inverto designed a scalable, GenAI-enabled negotiation model combining automation with expert oversight. The objective was not to replace procurement judgement, but to industrialize repetitive negotiations while maintaining full control, transparency, and escalation logic.

This operating model was delivered through Inverto’s AI Negotiation Factory, enabling the client to engage a large supplier base simultaneously and systematically.

The approach combined structured data analysis, clear governance, and AI-supported execution:

  • Supplier data analysis
    Procurement data was consolidated and analyzed to define key negotiation parameters. Suppliers were segmented by performance, risk, and negotiation targets, providing a fact-based input to the AI-enabled negotiation engine.
  • Automated supplier engagement
    Over 200 suppliers were engaged simultaneously through AI-tailored communications adapted to category context, supplier profile, and value levers.
  • Human-in-the-loop oversight
    Twelve AI agents     within the Negotiation Factory analyzed supplier responses, proposed counteroffers, and escalated exceptions through defined decision logic. Live reporting provided full visibility into negotiation progress and savings pipelines, while consultant oversight ensured quality, accuracy, and integrity maintaining a robust “human-in-the-loop” setup.

// Result

Turning Untouched Spend into Immediate P&L Impact

The initiative delivered clear and lasting benefits:

  • Thousands of automated supplier interactions completed within 15 weeks.
  • 1–3 % savings achieved on historically “untouched” tactical spend, with immediate P&L impact through continuous implementation of negotiated cost reductions.
  • Procurement workload significantly lower than in traditional negotiations, enabling teams to focus on strategic activities.

By industrializing tactical supplier negotiations, the AI Negotiation Factory fundamentally changes the economics of supplier management for organizations with large supplier bases. Procurement teams can now systematically address the bottom 75–95 % of spend that was previously considered “too small to manage”.

As this project demonstrated, GenAI-enabled negotiations can protect margins, enforce governance, and deliver rapid, scalable impact all while keeping human expertise firmly in control.

Contact Our Experts

Katharina Erfort

Principal

Inja Knavs

Project Manager

Leonardo Arcidiaco

Senior Consultant

 

Further Insights

Industry Retail Retail

White paper Retail in transition: How AI can pave the way to cost savings Retail in transition: How AI can pave the way to cost savings

Reference Case Achieving 5% Cost Savings in Building Materials Achieving 5% Cost Savings in Building Materials