Definition of buyer resistance
Buyer resistance refers to the deployment of procurement resources by a buyer in an attempt to obtain lower prices from suppliers. When confronting unexpectedly high prices from suppliers, a procurement division may devote resources to resist the price increase.
Examples of buyer resistance include:
- efforts by buyers to identify, invite, and encourage qualification of additional bidders
- changes to the acquisition process in efforts to elicit price/term concessions from historically qualified bidders (e.g., changes in the quantity and frequency with which purchases will be done in exchange for price/term concessions)
- development of internal production capabilities (vertical integration)
- the broadening of product requirements so as to include substitute products that were previously not entertained.
In an attempt to mitigate buyer resistance, the prosecuted cartel in carbon brushes (the conductive element that transfers electricity from a hot rail or wire to a moving electric tram or train) discussed and agreed upon artificial “justifications” for their collusive price increases, including such things as the claim that environmental requirements cost extra, that raw material prices had increased, and that wages had increased.