Analysis of result
Depending on the result of the cost estimation another meeting might be in order to discuss or re-negotiate factors that has come to light during the investigation. A few different standard scenarios might occur:
• Quoted price and cost estimation analysis are comparable
o No further action needs to be taken
• Quoted price is higher than cost estimation analysis result
o Peculiar situation where buyers should look at the intended strategy for the supplier. If it is a good supplier that we have a long time plan for the reasonable thing would be to pay them accordingly and hence continue with a follow up meeting to re-negotiate price to a long term sustainable level for both parts.
• Quoted price is lower than cost estimation analysis result
o One has to take into account the suppliers financial standings and other accounts, are they in jeopardy of going bankrupt because of faulty pricing or is this a one-off occurrence? If a long term strategy for the supplier exists it is of great importance for Autoliv to keep the supplier alive and hence arrange a follow up meeting to discuss the suppliers financial standings and pricing practices.
As a sign of good faith and increasing the competence of the supplier, suggestions on impovements of the supplier production process should be adressed even if the inefficiencies do not impact price. By fostering the supplier to be a learning organization stronger relational ties will make it easier in the future when dealing with the supplier and also by increasing the general competence of the supplier.