True competition would require that you be willing and able to switch vendors. But your current supplier may be working closely with your team. Or there may be few alternatives to the current partner, and you may be in the middle of a long-term agreement with heavy penalties for ending the relationship early. Not to mention the fact that formal sourcing methods such as RFPs can disrupt strategic relationships, and will eat up significant time and resources across the organization.
Your suppliers know that it is hard to switch, and they will leverage their incumbent position to charge a higher price than you would pay if selecting a new solution today. When your vendor's pricing is above current market rates, developing the correct negotiation strategy requires that you quantify the nature of the premium you're paying, and ask yourself why your supplier believes it doesn't need to make price or service concessions.
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Keywords: supply chain management, supplier base, supplier selection, supplier pricing strategies, paring suppliers, renegotiating supplier contracts
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