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What's the best way to research pricing from potential new suppliers, without damaging the relationship with my current supplier?

Posted: 2012-06-05

Full Question

How do you negotiate price with an existing supplier that you have placed orders previously and you're generally satisfied with quality and relationship but just want to make sure you're getting the best price? Do you still go around and get quotes from other suppliers and then how do you approach your supplier with those quotes? I just don't feel very comfortable about telling them that I have been shopping around. I am afraid that would hurt our trust and relationship we've been building over years. What are your thoughts on this? I have found from my research that my supplier is in mid-range price level, as I have gotten both higher and lower prices from others, but I just suspect that few of the lower ones were just the trading companies giving me a teaser rate that would probably go up immediately after I show some interest.

Answer

Here are a couple of ways to bring up price with your existing supplier without compromising the relationship, since you want to keep them.

1.  I tend' to conduct research from other suppliers, and my primary supplier doesn't get upset because I blame it on HQ. Something like: "Mr. Wang, I think you are the best supplier, but per corporate Standard Operating Procedure (SOP), they conduct period research into the prices in China."
2.  The other way is to blame the economy. Explain that these are hard times and in order to keep the current orders, they need to give price concessions.

BTW, you are absolutely right about the "teaser rates," especially trading companies do that to snag potential buyers. So if you use option 1, it needs to be done professionally, as if you get enough quotes, you will have a feel for what is high, low and average.

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