Just read [url= http://www.bbc.co.uk/news/business-30338663 ]this[/url], how can it be right to ask a supplier to provide goods AND money? Mind boggling!
was like "blackmail".
Like? That's one way of putting it.
Oh, and your links broken: http://www.bbc.co.uk/news/business-30338663
I'm just hoping my customers don't ask me to pay them to work for them, not a sustainable business model!
Fixed the link ta 🙂
On the one hand its seriously shady. On the other hand how often do you hear "can you do me a logo/pie chart?"
Interesting, I am probably being quite naive but if someone started down this line:
We are looking to obtain an [u]investment payment[/u]
I'd assume two things,
1 they were going bust, and I need to find a broader customer based.
2 that providing that "investment payment" would mean that I got a proportionate share in the business.
Do those who paid up not now constitute shareholders?
Similar to most supermarkets , where the independent retailer who supplies them has to sign a contract to buy back any surplus stock (such as bread) at the end of the day but at the retail price rather than wholesale. The supermarket can't lose
No more Mr Kipling for me then.Simple.
Similar practice to what Tesco and Asda do. Not a great way to do business.
Interesting, I am probably being quite naive but if someone started down this line:We are looking to obtain an investment payment
I'd assume two things,1 they were going bust, and I need to find a broader customer based.
2 that providing that "investment payment" would mean that I got a proportionate share in the business.
Do those who paid up not now constitute shareholders?
I'm afraid you'd be assuming the wrong things!
This practice is [i]very[/i] common within the food industry, I'd actually go as far as saying that if you want to deal with the big boys, it's the norm. Therefore nobody assumes that a company asking the supplier for some kind of payment is going bust. The supplier has only made a payment to the customer so that the customer can invest, not the supplier investing in the customer.
The other nice little trick that some of them pull is the "approved suppliers list", now I suspect that these are common in all industries, but in the food industry, you often have to pay to get on the list. An example I know of involves a supplier of cooked meat to one of the European discounters (but for business only in the UK). The supplier became aware that orders had dried up from this customer, they were never a big customer, taking only one product and not much of it, but a lost order is a lost order. When the supplier spoke to the buyers at the discounter they were told the orders had stopped as they were not on the approved suppliers list, and that to get on it would cost £20,000, nothing wrong with the product being supplied, just not on the list. Supplier paid his money and waited for the orders to roll in. Nothing. After about 6 months the supplier took this up with the customer and was told that just having paid up and being on the list was no guarantee of actually getting any business. Supplier asked for his money back. The response was "No, you've paid a one time, non refundable charge to become an approved supplier, you can't have it back, but we can de-list you if you want, and at the same time, the products that you sell to a third party for further processing that then comes to us will also be de-listed." Basically shut up and go away, or we'll make sure you get hurt. This particular supplier didn't as most do, just accept this, they set off down the legal route to get the money back. It got very close to court, but the customer eventually caved and paid back the £20,000 because the big boys in the food industry really don't want this kind of thing getting into the public domain and a court case would have made sure that that happened.
The other interesting practice is for the customer to demand that a promotion (bogof etc) is funded by the supplier. They'll just announce that in 4 weeks time or whatever, they want double the usual amount of product, but that you will supply it for effectively half price. Or, in the case of one of the supermarkets a few years ago, the £1 per bottle donation to (I think) comic relief was funded by the supplier under threat of de-listing. The shelf front label didn't tell you it was the supplier paying, it told you that the supermarket were donating. That one did make the press, but only in a small way and I think that each bottle sold actually ended up costing the supplier. The supermarket were embarrassed into doing some kind of a deal in the end but I don't know the details as that's not our industry.
So, all perfectly normal in our wonderful food industry! The supermarkets are way to powerful and arrogant and unfortunately their business practices have filtered down the chain to the larger suppliers like Premier, who are passing on the pain.
Bit of a rant, sorry. (But we all love our bogofs, our clubcard points, our nectar points and our milk supplied from the farm gate below the cost of production don't we)!
Purveryors of processed shite to the nation, glad to say apart from the occasional OXO cube I don't think I've ever bought anything from them.....
http://www.premierfoods.co.uk/our-brands/
talking to a local sheet metal/tin basher/fabbing company yesterday, has to pay a lump sum annual 5% of his years invoicing back to a local food manufacturer in order to stay on the list. Just adds the cost onto the work.
You choose to live in a Capitalist society. Move on or move to Russia.
Of late, I've been going around the country working in various food processing places, most of whom seem to supply all the supermarkets.
What did surprise me was the claim from a lot of them that M&S put the biggest squeeze on their margin.
I was sort of expecting the likes of Tesco being the biggest villain but apparently not.
Going to email premier foods to see if they want to be on my approved shopping list for a nominal annual fee.
LHS a monopoly is not a free market (ala capitalism)
taking the pi55 has never been an offence
During my short time in print management asking suppliers for rebates for supposed support services wasn't the most ethical thing I've ever had to do. The end customer always ends up footing the bill anyway.
They don't have a monopoly.
This pretty much happens in every industry.
Out of their brands I use Bisto instant to bulk out gravy (mixed with pan juices/scrapings/wine) and the odd Ambrosia rice pot.
But how much of their production is made for other brands?
Standard practice amongst the supermarkets, this. Mrs Binners used to work for one of the big food companies. If they were trying to get a new product into one of the supermarkets, then it would come with a long list of demands about the marketing and advertising you'd be doing on their behalf, the promotions you'd be offering, the huge discounts you'd be giving them, etc, etc, etc.....
When you see those BOGOF or heavily discounted offers in the supermarket, its the supplier covering all the costs of that. Not Tesco/Asda/Sainsbury's/Morrisons.
And their attitude is: if you don't like it, then **** off!
LHS - Member
"This pretty much happens in every industry"
That is not true, it does not happen in every industry. Just those that are price driven because the end customer will not pay for good quality.
Just so you know, Russia is now a truly unregulated capitalist country, thats why its such a lovely place to do business. 🙂
As a few have mentioned, this isn't actually an exceptional, one-off event and reflects a common practice in this industry, with similar types of deal in other industries also.
And it is a free market in the sense that there is a choice available - suppliers will only cough up if they believe that, net of all such "investments", "rebates", "marketing contributions", "purchasing income" and whatever other wheezes are introduced, the money they end up with is sufficiently more than the cost of producing and delivering the goods that it's worth their while doing the deal, otherwise they'll walk away.
Sometimes, the wheezes are a bit of a con where there's a lack of transparency and customers are effectively being given false information - for example in contract catering, the "cost-plus" contract:
The deal is that the caterer agrees to deliver the service to, say, a school on a "cost-plus" basis - they charge the customer their direct costs and a percentage on top, for overheads, management and, of course, profit. It's all very transparent as the caterer will provide the customer, along with their invoice, copies of their (the caterer's) purchase invoices for the food etc. so the customer knows that the "cost" figure is true. What they don't see is that the caterer gets a "volume rebate" or some such innocuous sounding kickback from their suppliers, such that what they've told the client they're paying for the food is not actually the amount they do pay. That may sound reasonable(ish) as getting a retrospective discount for buying lots is a logical business device. Except that in these cases the supplier may well know what the rebate rate is at the point they buy (and when they tell the customer what the food cost them based on an inflated invoice cost), and that the rebate isn't a 1-2% discount, but might be 70-80% of the invoiced value.
The same certainly used to happen in the IT industry (not worked in it for a few years now so my info might be out of date). Firms providing an integrated outsourced solution (providing hardware, networking, support, consultancy, training etc. - the 'outsourced IT department') will tell their customers that they aren't putting a margin on the hardware they supply (to assure the client that they are providing the kit that's right for them, not just what they want to sell them), and may provide copies of purchase invoices to assure the client that what they charge the customer is what they get charged by their supplier. But guess what? Yep, those "retrospective volume rebates" kick in at the end of the quarter and the reseller isn't actually paying anything like the invoiced value for the kit they've resold...
IIRC someone once told me that the suppliers have to pay the stores a nominal fee for every hour that the green fruit / veg totes lay empty on the shelf thus effectively leaving it up to the suppliers to ensure that there is enough supply to cover the demand.
The conversation came about as a major supplier had just suffered a severe fire which disabled their plant and by far the cheapest way to get around this was to erect a massive marque and fill it with brand new state of the art packaging and processing equipment.
That is not true, it does not happen in every industry. Just those that are price driven because the end customer will not pay for good quality
Don't be blinkered, it happens everywhere and is part of our wonderful capitalistic driven society.
When i worked for a small jewellery manufacturers in brum, at christmas we had to contribute towards H Samuels christmas ad campaign.
After Christmas one year Another large jewellery retailer returned approx 100k worth of goods to another small jewellery firm, the owner on finding out went into the polishing shop, put a teaspoon full of cyanide in a cup of water and topped himself.
We are a very small supplier/contractor for a major UK supermarket. About this time every year we have to provide very experienced and qualified engineers to........stack shelves. FoC for an entire day. This is on top of being squeezed so hard on prices that we debate whether to walk away every year. I ****ing hate them. I hate their attitude.
We do work for another, more [i]germanic[/i] supermarket. They are an absolute pleasure.
Would that be Premier Foods the industry's best known shysters? I've just had a look at their website. I wouldn't miss any of it. It's sad for small businesses who have to deal with them though. Bloody crooks.