Facing a Price Change After Finalizing a Purchase Order: How Should I Handle This?

Dear Seniors,

A very good morning to all and a great day ahead.

Here I am in a dilemma for taking a strong decision. Below is my situation.

Last week, our company had a requirement of software for a particular employee. I collected a number of good quotes from the vendors and finalized the order from a specific vendor after receiving confirmation from management. I also sent the vendor a confirmed purchase order. The vendor now says that the amount mentioned was changed last night, and the new price would be Rs 300/- extra.

My question is, is it possible to change the price in the finalized quote by the vendor? If it is acceptable, is it good to talk with my management regarding the new price? Can I argue with the vendor to get the product at the earlier mentioned price? What would be the best decision in this situation? I have no problem communicating this to management, but I need a strong argument.

What would be your approach to this type of issue? I understand that this is not typically an HR function, but I believe HR can assist in this matter.

Expecting your valuable inputs.

Regards,

Soja Oliver Dev Web Services (I) Pvt Ltd

If any clause in the quotation of the vendor, such as price, will change at any time before releasing the purchase order, you have no choice. Otherwise, you may need to negotiate with the vendor to supply the item at the agreed price.

[QUOTE=ramesh5;949409]

If any clause in the quotation of the vendor, like price, will change at any time before releasing the purchase order, you have no choice. Otherwise, you may fight with the vendor to supply the item as per the agreed price. Alternatively, you may also check whether this vendor follows the same principle. If yes, you may discuss this issue with your superiors and identify another vendor.

Typically, the quotes I have seen have a validity date. This quote is valid through xxx date. Regardless, if you have sent the PO along with the quote, you can and should fight it. Else, you can threaten to cancel the order and go with another vendor. That's what I would do in your place. --Som G

Dear Soja,

If they haven't mentioned anything about the price change in the final quote and didn't specify the validity date of that quote, then by all means, you can argue with them. Try to bring your immediate supervisor into the role. If there is no change in the situation, then bring it to the notice of the management and with their nod, threaten the vendor that you will cancel his order. If he agrees, well and good, or else look for another vendor.

All business transactions are based on fair business practices and business ethics.

• Prices of certain items are very volatile and they keep changing every hour. In that case, the vendor needs to mention the validity period in the quotation. Some vendors also include a clause in the quotation that the buyer needs to reconfirm certain important clauses and prices before placing the final Purchase Order.

• In any case, the vendor has the choice of not accepting any purchase order for a valid or frivolous reason, possibly at the cost of losing credibility and reputation.

• In this scenario, the buyer can exert pressure on the vendor to honor their quoted price, or else lose this order as well as potential future business.

• The buyer has the option to go with the next best quote.

Thanks & Regards

Dear Soja,

As per your point, you have already received the rate and finalized it, so there is no need for a price change at night. You have a very strong argument. If you have a written document of the final purchase order for the same price, you can claim it.

Thank you,
Gopal Kumar Gupta.

So, the situation has not changed for long. "Customer is still King...!" hehehe. Put your foot down and ask him the price you want it at and what he had agreed to initially. Otherwise, try out some other vendors and check their prices. Unless this current vendor is 'exceptionally reasonable' in his quotes, you could inform your management about the same and let them make a decision on whether it's fine to pay that additional Rs 300.

Regards, Lionel

It all depends on the terms and conditions of the offer. If your vendor had inserted specific conditions like the rate prevailing at the time of supply only will apply or subject to change by the manufacturer, then such price changes can legally take place. The purchase order will be treated as legally concluded only when your vendor accepts the same unconditionally. You can, however, discuss the matter with your vendor, but the outcome will depend on your negotiation skills. In this case, since your supplier did not accept the order, you have an option to go for alternate sourcing.

Dear All,

Thank you for your inputs. I talked with the vendor, and they agreed to deliver the products for the settled price. Everything ended in harmony. They will be delivering the products on Monday. I gained some confidence since I could solve the problem by myself without sending it to top management. The CiteHR experienced community is a big factor. I will be coming again with a new issue.

Hi Soja,

Any purchase to be made should ideally be done by floating a 'Request for Quotation' form, which ideally should be on a letterhead clearly mentioning the terms and conditions, conditions for incremental price, etc. Ideally, the RFQ must be floated to all the vendors. Post their acceptance, you can go ahead with the selection process. Even now, it's not too late to float the 'RFQ.' You can ask for some more time from the management for the selection of the right vendor. Float the RFQ again to all vendors with all terms/conditions and then go for the final selection. This will also pressure the existing vendor. Google for more RFQ details.

Regards,
Glen

This is what is lawfully and logically correct:

Every offer has a validity period. If you have acted within it, the vendor must accept it. If you have acted in time but your acceptance has not reached the vendor within the validity period, they are not bound by your acceptance. The vendor is not supposed to change the price within the validity period unless there is an escalation clause in your inquiry or their proposal. If everything is in order and yet the vendor changes the price, this vendor is not worth dealing with.

Lastly, and most importantly, never get trapped in the middle of problems. This is an issue between the organization and the vendor, not you. You are the liaison between the two, and you must work most efficiently without getting involved.

1. Ask the vendor to supply the software at the agreed price. If they do not agree,
2. Inform your management of the breach of the agreement and start afresh with their approval.

You can only understand from the vendor the reasons for a change in the price. If you get a convincing answer from the vendor, you can talk to your management. If the reason is not convincing, you shouldn't proceed with this vendor, given the lack of reliability. You may also want to escalate the matter to the next level in the vendor organization. Is this one still competitive compared to other quotes? Is the overall impact only 300 rupees, or is it more? Answers to these questions will help in making an appropriate decision.

Dear Soja,

- Go through the quote thoroughly once again.
- Check the validity period of the quote. If it falls before your P.O. date, it's fine. You can negotiate with the supplier.
- At this juncture, it is better to involve your immediate superior.

Sridhar