Question

Pricing scenario. Consider a scenario where one of your suppliers has increased their price (and hence your cost) on the components that your firm buys. Further assume that you have contractual agreement and your firm is not in a position to change suppliers at this time and your internal costs will be very high to change processes required to switch to another supplier. Also, assume that you are not in a position to pass this increase to your customers. How would you respond to this situation?

Answer 1

This situation will be handled through few strategies which are

1) Renegotiation with existing supplier

2) Effort to increase sales turnover and size of customers

3) Try to reduce cost by cutting the same in other activities

4) Searching more no. of low cost suppliers

5) Internal people should be ask to offer solutions

6) Legal cost of breach of agreement and margin analysis with experts of industry or management consultants will be contacted.

7) Asking research experts to devise cut of inventory and input supply cost.

In this way, I will get some of the techniques to reduce the overall cost of operations and customers will be offered same price schemes.