Executive Briefings

Proactively Deal with Suppliers' Requests for Price Increases

Make the process of requesting an increase difficult, requiring the sales representative to work hard. Demand three months' notice, in writing, of all increase requests and insist that they are accompanied by a detailed statement of the actions the supplier has taken to reduce or eliminate the need for an increase. Similarly, a rigorous internal approval system will deter supply management professionals from accepting increases without challenge because of time pressure or the desire for a quiet life. Such a program of deterrence should put the supplier on alert that price increases require approvals and that the supplier must truly face margin erosion for a price increase to be considered.
Source: Inside Supply Management, http://www.ism.ws

Make the process of requesting an increase difficult, requiring the sales representative to work hard. Demand three months' notice, in writing, of all increase requests and insist that they are accompanied by a detailed statement of the actions the supplier has taken to reduce or eliminate the need for an increase. Similarly, a rigorous internal approval system will deter supply management professionals from accepting increases without challenge because of time pressure or the desire for a quiet life. Such a program of deterrence should put the supplier on alert that price increases require approvals and that the supplier must truly face margin erosion for a price increase to be considered.
Source: Inside Supply Management, http://www.ism.ws