Rapid relief from LTA headache

I have recently been struggling to get one particular supplier to sign a long-term supply agreement [LTA]. They wanted to double the price. The attitude was ‘take it or leave it’. They knew we couldn’t replace them—it would take years and cost millions to re-qualify—so they held all the cards. It was delicate because they are also an important customer. We escalated the problem up through the DLA structure. Annette [Hobhouse, Managing Director] immediately involved Mark [Crompton, Operations Director] and within a few days Mark and I were sitting down with the supplier.

“There and then, Mark was able to discuss the cost changes behind their price rise and to talk about Meggitt Avionics’ future demand for the product in terms of our own customers’ needs. Without DLA to produce a very quick senior management response that sort of exchange would have taken much longer and required several more meetings to get us to the same place. As it was, the whole problem was wrapped up in a few days and we came away with an LTA based on a much better price. Could that have happened in the past? I very much doubt it. Procurement would have been left to sort it out largely on its own, management responses would have been much slower and the negotiations would probably have dragged on for months.” ■