It had been 10 years since Recreational Equipment, Inc. (REI) evaluated its overall vendor relationship structure. "Leadership felt we may not be optimizing relationships with merchandising vendors to the mutual benefit of both REI and our vendor partners," says Russell Paquette, treasurer. So it was time to reassess.

That was two years ago. Since then, the $1.3 billion retailer of outdoor gear and apparel established the Merchandising Vendor Partnerships project (MVP). The MVP is a cross-division effort to research payment terms and discount arrangements to determine ways to optimize supplier relationships. "We wanted to take a holistic approach," says Paquette.

Lorraine Weber, treasury manager, and Brian Foley, merchandising product manager, led the successful effort. "REI will free up $25 million to $40 million in cash flow and add from $1 million to $5 million to REI's bottom line from additional investment income and cost of goods sold reductions," says Weber.