Combatting rising costs

Supplier inflation has been affecting practices for some time now, with the matter highlighted by the BVA in November 2023 in its submission to the Competition and Markets Authority review into practice pricing¹.

But if it was not a steep inflationary rise because of the pandemic, geopolitical events such as the Russian invasion of Ukraine or the conflict in and around Iran, then it was the effect of government policy on taxation and Brexit.

So, what can practices do to keep their ships upright in the face of such (permanent) economic headwinds when buying supplies?

A change in pricing methods

Rob Sansom, client solution director at Procure4, reckons the pricing landscape for all business sectors has shifted significantly in recent years away from relatively stable, cost-based pricing to a far more dynamic and volatile environment. He said: “Global disruptions have all contributed to increased uncertainty across supply chains and input costs.

“As a result, pricing is no longer just a function of negotiation.”

Similarly, Joanne McCourt, chief executive of Ebit Intelligent Procurement, believes that “operating through uncertainty has become the norm”, and so thinks that “developing stronger customer and supplier partnerships is now very important.”

She thinks that “customers and suppliers are – rightfully – becoming more demanding of each other” and that “‘cost inflation’ is no longer the blanket rationale, and customers are looking for more measurable and guaranteed returns for their investment.”

Correspondingly, buyers and suppliers have had to become more sophisticated in how they act.

Responding to price increases

Naturally, how practices respond to price increases will depend on their size, supplier power, market structure and the availability of alternatives.

The starting point for Rob is to “negotiate with intelligence rather than aggression”. This means “understanding the supplier’s cost drivers – what has actually increased, by how much, and whether those changes are temporary or structural – so that conversations are grounded in fact rather than assumption.”

For Joanne, a “one-size-fits-all” approach does not exist. Even so, she said: “I wouldn’t take cost increases lying down; they need to be reviewed and challenged, and the business may need to make some changes quickly to manage the impact.”

Rob said it is important to focus on total value rather than price, adding: “A lower-cost supplier can often create greater cost elsewhere through issues with quality, reliability or service.”

None of this should stop practices reviewing specifications, or finding substitutes to lower costs. Rob gave a practical example of this: “Businesses that faced shortages of niche ingredients during recent geopolitical disruptions… rather than absorbing sustained price increases, they responded by reformulating products, identifying alternative inputs, and reducing reliance on single sources.”

Joanne would also look for opportunities to cut costs to balance out price increases. That said, she added: “There might be a need to make difficult and more strategic decisions elsewhere.

“I would always recommend going out to the market, even if it’s just to validate that other suppliers are pricing similarly – you only know what you know.”

David versus Goliath

The heft of a big corporate gives it leverage, but that does not mean that it is all over for the smaller organisation.

Jo said: “At times like this, it is about thinking outside of the box, based on your unique circumstances, considering both the short and long-term consequences.”

Rob takes the same line, adding: “While smaller firms may lack the scale of larger organisations, they still have a number of effective levers available when negotiating with suppliers.

“One approach is to increase their perceived value by bundling spend where possible. Consolidating purchases can strengthen their position and make the relationship more commercially attractive to the supplier.

“Similarly, offering longer-term commitments can be used to negotiate greater price stability.”

He also recommended smaller practices look beyond price and negotiate on broader commercial terms. This might include improved payment terms, priority allocation during periods of constraint or enhanced service levels.

But if a price increase is coming, Rob thinks there is room to shape how it is applied. He said: “Rather than accepting permanent uplifts, businesses can push for temporary surcharges that are reviewed or removed as market conditions stabilise; linking pricing to specific indices or cost drivers can also introduce greater transparency, while reviewing clauses ensure that prices adjust if underlying conditions improve.”

Whatever the route, Jo suggested that it is all about people, and that “having good quality relationships with your suppliers will put you in a stronger position to agree compromises that are fairer for all.”

Professional help

Practices can do much themselves. However, Jo considers it “strange for businesses to want to create their own internal indirect procurement engine – they didn’t create their businesses to become indirect procurement experts”.

So clearly, external support will eventually be needed. From Rob’s perspective, this could be where cost increases become significant (10% to 20% or more), where a high level of supplier concentration exists, where internal procurement expertise is limited or where contractual arrangements are complex. It should be no surprise that he believes external specialists can “bring a combination of market insight and execution capability that is often difficult to replicate internally”.

By this, he means “access to benchmarking data, structured negotiation expertise, deeper supplier intelligence, and the ability to optimise contracts in line with current market conditions”.

Joanne thinks the same, as she said: “Outsourcing procurement is an option that allows businesses to work with a professional partner who has the relationships in the market, who can operate at speed and has a wider network to move deliver ROI positive outcomes.”

Of course, there is a cost, but Rob said that “the value generated should significantly outweigh the cost of engagement”.

Wrap up

The balance of power is moving. Artificial intelligence, analytics and real-time data gives suppliers and buyers more insight into pricing and an ability to accurately forecast. But even with such knowledge, practices need to prepare for volatility rather than react to it.

Ultimately, practices that are successful are those that have struck the right balance between commercial discipline and supplier relationships while looking to protecting the business.

This article appeared in Vet Times (4 August 2026), Volume 56, Issue 31, Pages 17-18.