Why Suppliers and Buyers Need a New Approach to Pricing

Talk all you want about the deeper aspects of supplier-buyer relationships. But doesn't it always come down to price? Well, maybe. But supply-chain partners aren't doing an especially good job of managing that critical piece of the puzzle. In fact, the current approach is in many instances ''myopic and inefficient.'' So says Kate Vitasek, a member of the faculty in the University of Tennessee's Graduate and Executive Education program. The lead author of a new UT white paper on ''Unpacking Pricing Models,'' Vitasek joins us on this episode to explain how buyers can craft long-term, mutually beneficial relationships with suppliers, without ignoring the all-important element of price. She outlines the differences between controllable and uncontrollable costs, and shows how a considered approach to pricing models can address the underlying nature of cost structures, and avoid some of the traps that frustrate true collaboration.