Procurement of welded steel components by a maker of tramcars
Until recently, a maker of tramcars procured welded steel parts from Western European suppliers. However, heavy market demand and the reulting hig level of capacity utilization drove up prices by some 20 percent. As the tramcar maker was unfortunately not in a position to switch suppliers at shot notice, the supplier had the company over a barrel. After a pragmatic review of capacity utilization in other industries across various countries the tramcar maker found that Eastern European shipyards had come under pressure from asian competitors were suffering from severe overcapacity. As a result, it was able to ob-tain attractive competing offers from qualified suppliers. While a change of supplier was not possible on short notice, a credible announcement that other suppliers were avaiable was enough to ward off the threatened price increases. The tramcar make made use of the following years to build relationships with these new suppliers, testing and approving their products.