Supplier Negotiation

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Hannah: Thanks for joining, Raj. I'll be upfront: we'd like to continue working with you, but your new quote of twenty-four dollars a unit is well above what we'd budgeted for. We were expecting something closer to twenty. Raj: I appreciate the honesty. The increase reflects our costs, though — packaging alone has gone up nearly fifteen percent since last spring. Hannah: I understand that, and I'm not asking you to absorb all of it. But a twenty percent jump in one go is hard for us to justify internally. Is there any flexibility if we look at volume? Raj: Possibly. What kind of volume are we talking about? Hannah: Last year we ordered around eight thousand units. This year, if the new product line goes ahead, we'd be looking at twelve to fifteen thousand. Raj: If you could commit to twelve thousand as a minimum, I could probably come down to twenty-two. Hannah: That's movement, and I appreciate it. The difficulty is that I can't guarantee the new line until the board meets in June. What if we signed for ten thousand now, with an option to increase? Raj: Ten thousand at twenty-two doesn't really work for us. Let me suggest something else. Ten thousand at twenty-three, and if your total orders pass twelve thousand by December, we apply a retroactive discount and bring the whole year down to twenty-two. Hannah: So we'd get a credit at the end of the year. That could work. There's one more thing, though: delivery. Last quarter, two shipments arrived more than a week late, and it cost us a major retail order. Raj: I'm aware, and frankly that was on us. We've since moved to a new logistics partner. I'd be willing to put a late-delivery clause in the contract — say, two percent off the invoice for every week of delay. Hannah: That would go a long way towards reassuring my director. Let me take the proposal back to my team, and I'll get back to you by Thursday. Raj: Sounds good. I'll send over a written summary this afternoon.