Price Increase Approval Process Overview

P&S is responsible for maintaining vendor pricing and margins.  If we receive a price increase from a supplier, the P&S Specialist is responsible for negotiating the increase.  The goal is to get the increase removed, but if that is not an option, we want the increase negotiated down as much as possible.

***Before completing the Price Increase Form, please do the following:

• Ask the previous Product Specialist (if applicable) to provide background about the item and/or vendor.  Have there been price increases in the past?  If so, what were the reasons?
• If the vendor cites a rise in the cost of materials, research the commodity costs to verify. 
• Ask SCM if our vendors who make similar products have mentioned this material increase.
• Go back to the vendor and try to negotiate a lower price.
  • Can we get a lower price for a higher MOQ?  
    • *Note: Check the annual forecast to confirm this request makes sense.  We do not want an MOQ higher than six months of the annual forecast.
  • Do we currently have bracket pricing? 
    • If not, does our order history justify the request?
  • If there are multiple item increases, can we negotiate a lower price on higher-selling items and accept an increase on items with lower sales?  Remember to look at dollars when reviewing sales history, not just quantities.
• *Note: If a vendor submits a price increase for items not currently on an open order, please include ALL items on the price increase form.  We also need to identify “like items” that will likely get the same increase when we go to order them.  That way, we can include those when increasing prices to our customers.  If you know there are “like” items that the vendor did not include in the initial communication, please ask them to provide pricing for all SKUs.

*Note: If the item is a component or a sub-assembly in a BOM, please include the active assembly item(s) it belongs to so the Divisional VP can see the cost increase effect for the finished goods.

The Price Increase Forms have example items for reference.  Please copy the formulas when you add your items, and then delete the example lines before sending them to the Director of P&S to avoid confusion.  Please leave the formulas intact, so whoever reviews it can see which cells the data is pulling from.

***When emailing the requests, use PRICE INCREASE REQUEST – XXXXX COMPANY in the email’s subject line.