Strategy Planning - Tech Parts

Strategy Planning - Tech Parts

1. 1.- Initial Respons to supplier demands within 24 hours

   • Formal Acknowledgment and De-escalation
     • Propose: Joint working session to review cost data and explore solutions
       • Important: Avoid panic, shows willingness to engage, and establishes a timeline for resolution
     • Request: Maintaining current supply terms under our existing agreement
     • Leverage Contractual terms.
       • Highlight clauses related to price adjustments mechanisms, force majeure, or notice periods for supply halts.
         • Important: Emphasize legal consequences tactfully

2. 2.- Negotation Strategy

   • Phase 1: Validate Claims (Days 1- 7) --> Audit cost drivers
     • - Raw material cost increases (e.g., copper, steel indices)
     • - Logistics invoices (freight, fuel surcharges)
     • Production cost breakdowns (labor, energy)
     • Important: Compare against market benchmarks.
       • LME - London Metal Ex.
       • FREIGHTOS -Freight Indices
       • Other Suppliers
     • Assess Alpha’s Exposure
       • Calculate impact of $5M increase on vehicle margins.
         • Determine if partial pass-through to customers is feasible
   • Phase 2: Collaborative Negotiation (Days 8–20)
     • Propose: alternatives to preserve margins
       • Volume Commitments - Guarantee higher future orders for discounted rates (RIsk)
       • Cost-Sharing - Split raw material/logistics overruns 50/50
       • Process Efficiencies -Jointly invest in waste reduction
       • Phased Increase - $5M over 12 months
     • Relationship Leverage
       • Offer longer-term contracts (3–5 years) for stability
       • Note Alpha’s plans to dual-source parts if terms become unsustainable
   • Phase 3: Agreement Framework
     • Target a $2.5–3.5M increase
     • Include clause--> Ensuring Alpha gets equal/pricing better than competitors
     • Sign a standstill agreement preventing supply halts during talks

3. 3. Contingency Planning

   • Short-Term (0–60 Days
     • Safety Stock Activation
     • Expedite Alternate Suppliers
     • Production Re-prioritization
   • Medium-Term (60–120 Days
     • Fast-Track New Supplier Onboarding
     • Redesign Components
     • Legal Action
   • Long-Term Solutions
     • Supplier Risk Mitigation
       • Dual-Sourcing
       • Cost Indexation - raw material
     • Joint Value Creation
       • Shared Cost-Saving Initiatives
       • Open-Book Pricing - Annual Audits