Unlocking dedicated capacity in a concentrated category
We changed the commercial model so the supplier could invest, the retailer secured priority supply, and the cost base came down.
The problem
Supply sat with three or four national processors. The retailer was less than 10% of each supplier's revenue, so it had limited influence and could not secure dedicated investment through a normal tender.
Building dedicated capacity would have required a multi-million dollar commitment to capital investment and working capital. Under a tender-based procurement model, no supplier was prepared to make it.
Instead, production ran on shared lines, creating volatile service levels, inconsistent quality, and little opportunity for product differentiation.
Pricing included a risk premium for uncertain volume rather than the true cost to serve. The retailer paid more, but did not get better service, quality or control.
What Burnsall did
Undertook due diligence across a supplier long-list to understand true cost, capital requirements, and risk exposure under NDA.
Structured a multi-year commitment sized to justify investment in dedicated, segregated production lines and storage capacity.
Recovered capital expenditure transparently against committed volumes and term, rather than embedding it within unit pricing.
Aligned the supplier's lower risk-adjusted return with performance, introducing shared incentives to support volume growth.
Results over the partnership term.
20+ points OTIF improvement
Dedicated capacity and prioritised supply
Double-digit quality score improvement
New equipment and segregated lines
High single-digit structural COGS reduction
Built into the model, not one-off
Two first-to-market launches
Under the innovation incentive
Multi-year committed term
Supplier investment in dedicated lines and storage
What changed for the retailer
Dedicated capacity was established, securing prioritised supply aligned to the retailer's forecast demand.
Food safety risk was reduced through segregated production lines and investment in new, dedicated equipment.
An exclusive own-brand capability was created, enabling two first-to-market product launches under the innovation incentive.
This also delivered a validated structural cost base, shifting from one-off pricing gains to a sustainable, long-term improvement.
Three cases where a tender would not have solved the problem.
Building a coffee range from origin to shelf