Purchasing people are reluctant to ask for a price decrease from existing suppliers during a period of high inflation. As long as the supplier is not asking for more, they don’t want to rock the boat. Why give the supplier the chance to show that a large increase rather than some decrease is called for. Some suppliers may not ask for an increase that is totally justified because they fear that the buyer will then give business to the supplier’s competitors. While these opinions may not always be justified, they are at least understandable.

Right now though, we are not in a period of high inflation. So the question remains, when do you ask for a cost reduction and how often?

Many buyers only worry about a cost when purchasing a product for the first time or when first selecting a supplier. Purchasing managers who have moved from company to company know that it is relatively easy to get price concessions from existing suppliers when the suppliers are confronted with new purchasing management. Reductions of price of 10% or more from existing suppliers are common.

Keeping track of market conditions and the economy will help you determine when the time is right to ask for a decrease. Items in the news will give you a tip when to act. If prices of raw materials go down, you should encourage your suppliers for a reduction of price for the products containing those raw materials.

Another time to ask for a cost reduction is when major competition enters the industry you are buying from. Obtain a quote from the new supplier and ask your present suppliers for price relief.

One buyer we talked to said he takes the initiative when he thinks the supplier may be ready for an increase. He asks the supplier for a reduction before the supplier has had a chance to make the request for the increase. He believes the psychology used will prevent the supplier from raising prices although he may not get any actual decrease. He claims he has had great success with this tactic.