Danfoss drives a hard bargain with suppliers: … but may be missing out on the benefits of a “softly‐softly” approach

Abstract

Purpose

Examines the relationship between Danfoss Drives, a Danish company that produces apparatus for regulating the frequencies of electrical motors, and its four suppliers of so‐called “insulated gate bipolar transistors” (IGBTs), which are a key component of these devices.

Design/methodology/approach

Examines the reactions of each of the four suppliers to the Danfoss “supplier evaluation” meetings, the main aim of which seemed to be to force down prices.

Findings

Discovers that only one of the four suppliers reacted positively to the Danfoss approach, and that varying degrees of resentment were present in the others.

Originality/value

Highlights the potential benefits of a more collaborative approach when purchasing certain types of products.

Citation

(2006), "Danfoss drives a hard bargain with suppliers: … but may be missing out on the benefits of a “softly‐softly” approach", Strategic Direction, Vol. 22 No. 9, pp. 5-7. https://doi.org/10.1108/02580540610686469