Do not cut the relationship. Build the competition.

The first sign is not falling sales. It is rising costs.

And when you go and review the suppliers, you see something nobody had seen until then: their invoice prices sit a long way from the rest of the market.

Nobody had hidden it. Nobody had compared.

Why this happens

A supplier who stays inside one organisation long enough effectively arrives at a monopoly. And a monopoly takes a larger margin.

This is not necessarily bad faith. It is a condition. When no competitor is on the table, no pressure sits on the price. Anyone in that position does the same thing sooner or later.

So the problem is not that the supplier is bad. The problem is that the supplier is alone.

The mistake that is everyone's first reaction

When you see that price gap, the first impulse is to cut the relationship.

That is dangerous.

You should never cut off an established channel. The old channel has to remain certain that it is still inside the organisation, because its absence raises supply risk. An organisation that loses its long-standing supplier and then finds the newcomer cannot deliver has a bigger problem than price.

The approach that works

Instead of cutting, two things at once:

Build competition. Bring other channels in, even on a small share at first.

Reduce orders gradually, without that reduction reading as a message or an announcement. A supplier who works out they are being replaced changes their behaviour, and that change rarely favours the organisation.

What we saw in practice: in the end all channels came into competition at closely comparable prices.

Not through negotiation, and not through pressure. Only because none of them was alone any more.

The second trap: a claim is not a capability

There is one thing that, if you do not know it, turns this method into trouble of its own.

What people claim does not always mean the capability is there. Several times, new channels that had already been selected turned out to lack the capacity to supply.

You cannot establish this from a meeting or a reference. It only shows up in a real order.

How to make that test cheap

Two things, together:

First, a parallel order. While testing the new supplier, a percentage of the required material is still ordered from the established one. If the newcomer cannot deliver, the line does not stop.

Second, the contract. The legal terms have to be written so that if the new supplier fails, the organisation does not lose money. That is what happened in practice: the channels that could not deliver cost the organisation nothing.

With those two in place, testing a new supplier is close to free. And when testing is free, you can test often — which is where real competition comes from.

In short

An expensive supplier is usually not a bad supplier. It is a supplier who is alone.

The answer is not to cut the relationship, because cutting raises supply risk and costs more than the price gap did.

The answer is to build competition alongside them, move the share slowly, and make testing newcomers free through parallel orders and a properly written contract.