What is the best way to handle a supplier that is not meeting delivery deadlines but offering competitive prices?

Make comparisons for existing suppliers. Price is not the only criteria for selection. Deadline sometimes involve reputation and future course of action. Do not put your company at stake. Approach to another supplier, who may in future extend better price if not competitive today.   

This can be best explained using an iron triangle. Iron Triangle is formed of three sides i.e. Quality, Cost & Time (delivery)

When you select time you may compromise on Quality & Cost. That means each case has to be evaluated on its merits i.e. How best organizational goals are met.

There cannot be one straight answer.

1. Assess the reasons of the delay, the look for the possible support to overcome this issue. 
2. look for alternative supplier that can meet the deadline with similar offer or a little higher.
3. if it is regular consumption commodity, adjust the reorder point with safe lead time.
4. apply penalties for the delay, or let him pay the extra cost incurred due to his act to the net supplier in the list. 

If possible, advance the deadline.

In case, that is not possible, calculate financial loss you are incurring for such delay. If that loss is bearable then go ahead else explore other possibilities.

Try to send order earlier than the time you need it in and take note about that and you can also change payment way to letter of credit with a considered last shipment date to avoid the late of goods and but not the L/C well not be at sight but a condition of sending part or all money if you can after receiving your goods

best to order before the re order level is reached.

1.      If you have alternative supplier with justifiable price and he can offer delivery within deadline then go ahead with them, because your commitment is more important than cost effective.

2.      In case alternative supplier have the goods in stock and demanding high price. Your current supplier who have proven their good reputation, commitment  and you don’t want to cut relation, in this scenario let your supplier contact alternative supplier and arrange material from them and deliver to you as agreed. All suppliers know this tactic.

'no trust, no investment'. 

commercial commodity: hire before make an agreement & contract period is best solution to approach those arrogant vendor.

non-commercial: meeting, discussion & advice

FIRST OF ALL ANY SUPPLIER U CONSIDERED U WANT TO GO WITH HIM FOR LONG ..MAKE AN AGREEMENT ATLEAT REGARDING ABOUT TIME,QUANTITY AND QUALITY OF SUPPLIES  AGREEMENT MUST CONTAIN PENALTY.BUT IF SUPPLIER IS NOT AGREE TO MAKE SUCH KIND OF AGREEMENT THEN IT IS GOOD TO FIND ANOTHER SUPPLIER..BUT IF UR EXISTING SUPPLIER FAILED TO PROVIDE U SUPPLIES AT REQUIRED TIME..THEN1ST U SHOULD TALK TO HIM AND SHOULD KNOW THE ACTUALLY REASONS BEHIND LATE DELIVERY.THERE MAY B GENUINE REASON..IF U FIND GENUINE REASON AND UR SUPPLIUER IS GOOD OVERALL THEN UNDERSTAND HIS PROBLEM AND HELP THEM BECAUSE AFTER ALL HE IS UR SUPPLIER AND HE MAY GIVE U FAVOUR IN FUTURE..IF ALL THESE ARE NOT POSSIBLE OR NOT SUITS AT THAT TIME.THEN FIND ALTERNATIVE SUPPLIER..ALL SUGGESTION DEPENDS ON CIRCUMSTANCES

Waiting is better than losing.

Give him one month to adjust. If supplier doesn't fix its issues, FIRE them. The cost of reputation damage a company gets because of its supplier is very costly no matter how competitive their pricing is. You will find other suppliers.. don't worry.

Establish a diversified supply-base, and issue RFQ's to your supply base to control your competitiveness. Keep your Suppliers on the edge all the time, Cost wise & commitment to your terms.