Honouring Quoted Prices Through a Raw Material Spike

Client Background

Several customers holding first quarter polyester webbing orders

The Challenge

Orders for first quarter polyester webbing were taken before the Lunar New Year for delivery after the holiday. Raw material had not been stocked in advance because the procurement was planned for after the break. Supplier price adjustment notices then arrived one after another.

Customer Pain Points

• Material cost moving after the order price was already agreed
• No pre-holiday raw material stock to buffer the change
• Customers who had planned their own pricing around the quotation
• Pressure to reopen prices on orders that were already accepted

What We Did

No price increase was requested on the already accepted orders. The quotation had been given before the holiday and was treated as a commitment, absorbed on the factory's side rather than passed down the chain.

How It Ran

1. Accepted orders identified and ring-fenced from the new cost base
2. Procurement arranged after the holiday at the higher prevailing prices
3. Delivery schedules held to the dates quoted before the break
4. Cost movement discussed openly with customers for future quotations only

Result

Every accepted order shipped at the price quoted. The cost was carried by the factory for that quarter.

What A Buyer Can Take From It

A quotation is worth what the supplier's word is worth. If you are planning a season around a price, it is reasonable to ask a supplier what happened the last time their input costs moved after they quoted.