Taking the pain out of price rises

The response to our story earlier this week on the impact that annual price rises have on the distribution channel proves once again just what an emotive topic it is.

Most manufacturers which have put their prices up ahead of January 2013 will have already shared the reasons why with their supply chain, while those leaving prices unchanged are understandably keen to make their positions known and score a few PR points in the process.

It would be easy to get dragged into a tit-for-tat game of ‘who is and who isn’t’ raising their prices, but that would simply only serve to mask the real issue here, which is the amount of time that distributors are given to prepare for such changes.

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I think everybody at dealer and distributor level accepts that price increases are part and parcel of business, especially this time of year. It’s a fact of life. Some prices will go up, some won’t.

And let’s give manufacturers some credit here. Such decisions are rarely taken on a whim. Most catering equipment suppliers will endeavour to absorb rises in material, labour or production costs. But there comes a point for any business where it is no longer financially or competitively viable to do this, and invariably it has to be passed down the chain.

OK, you could accuse some manufacturers of only raising their prices because they have seen their nearest competitors do so, but there are arguably just as many that will deliberately keep their prices unchanged for exactly the same reason.

At the end of the day, every supplier has an eye on the bigger market picture when they go to update their catalogues. Nobody is going to adjust prices to a point where they fear it might be detrimental to their business.

Where there does appear to be room for improvement, however, is in how clearly and early it is communicated to trade partners. Most distributors would agree that the sooner they find out, the more helpful it is.

Nobody is expecting to get a heads-up a year in advance, but a period of three months has certainly been mooted as areasonable timeframe, and to be fair there are several manufacturers aspiring to do this.

Sure, it might not be possible for every brand to comply. Manufacturers are at the mercy of components suppliers who themselves might be slow in communicating any price adjustments, while others may belong to global organisations where local pricing announcements are influenced by what happens higher up the chain of command.

That’s all fair enough. What annoys most distributors is when changes are communicated with hardly any time to spare before they come into force.

When this happens, it is far more likely to compromise future jobs they have already won or tendered for. And the longer the lead time between quoting for the business and delivering it, the messier the situation potentially becomes.

Of course, much also depends on the extent to which manufacturers are prepared to honour previous prices when such cases present themselves.

That, too, will boil down to the individual relationship between the manufacturer and the distributor, and the degree to which sufficient communication takes place.

As a Bob Hoskins once said when promoting a certain national telephone operator, ‘it’s good to talk’.

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