You may have already seen the email.
A supplier warns of a pending price increase in the commodity you buy. Sometimes it shows up formally in writing. Other times it gets mentioned casually over drinks or appetizers, as if you are supposed to nod and accept it.
Do not.
Sales teams are trained to position price increases as unavoidable. Sometimes the market disruption is real. Geopolitical tension, AI-driven data center expansion, energy shocks, freight volatility, and commodity swings can absolutely affect costs.
But “market pressure” is not the same thing as a justified increase on your part.
In procurement, the right first response is not panic. It is discipline.
One of my favorite examples is copper-related increases on PCBs. It seems to happen every year. The headlines make it sound like the world is running out of copper tomorrow, and suddenly suppliers start pushing broad-based increases. Sometimes there is a real impact. Sometimes there is a story wrapped around an opportunity.
Your job is to know the difference.
Here is a simple 3-part strategy to challenge and contain supplier price increases:
1. Go on offense with a VAVE and cost-workshop mindset.
Let the supplier know you are preparing to review the full book of business through a VAVE or cost workshop. This is especially important if you have not done one recently.
That means doing your homework:
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Understand the true cost structure of the component
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Bring in cost engineering, product engineering, quality, or adjacent commodity leaders when needed
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Identify margin pockets, design inefficiencies, and outdated assumptions
If the spend is significant, you should already be building cost transparency before the increase request arrives. The strongest position in any negotiation is data. If your analysis suggests the supplier is carrying margins far above what the market and complexity justify, you need to know that before the meeting starts.
2. Force the claim into facts.
If a supplier says material costs are driving the increase, get specific.
Ask:
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What exact material is driving the increase?
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What index are they using?
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What time period are they referencing?
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What portion of the part cost is actually exposed to that material?
If they are selectively quoting market data from 2024 or choosing high points in the curve, challenge it. For volatile inputs like copper and other metals, average-based mechanisms are usually far more reasonable than point-in-time snapshots. In many cases, a 3- or 4-month indexed average is a much more defensible basis for discussion.
Do not let the supplier choose the dates that best support their argument.
3. Negotiate the full relationship, not just piece price.
Price is only one lever.
When you evaluate a supplier response, also look at:
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Payment terms
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Quality performance
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On-time delivery
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Engineering support
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Productivity ideas
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Collaboration and responsiveness
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Length and stability of the business relationship
A long-term supplier that has supported a program for 15 years without asking for relief may have a legitimate case. But even then, the answer is the same: validate the claim with a cost model.
Professionalism matters here. So does firmness.
Price increases are part of procurement life. They are not unusual. But they should never be accepted casually, emotionally, or without a fact base. Push back. Ask for the data. Test the assumptions. Negotiate from a position of preparation.
Suppliers need your business just as much as you need their product.
Stay sharp. Stay professional. And remember: procurement creates value when it refuses to confuse noise with evidence.
— Larry