The Supplier “Fires” a Customer! New Supplier Needed FAST

The Supplier “Fires” a Customer! New Supplier Needed FAST

Proficient Sourcing exists to help buyers find excellent custom manufacturing suppliers. Occasionally the buyer has issues that impede a good search, and in those cases we can have a very helpful role. Here’s an example:

Recently we were contacted to assist a supplier who wanted to “fire” a customer. Ultimately we were able to find an effective solution and the result is all parties are happy. The supplier no longer has a problem customer and the customer has a supplier better suited to present circumstances.

The situation began a number of years ago when the customer wanted a supplier to manufacture key parts for a new product. The project represented annual revenue of $50,000 to the supplier and the customer expected to grow the business several times that amount. The supplier had a history of supporting new products, and under these conditions the relationship was a very good fit. It ran nicely for several years.

Unfortunately, as time passed, things deteriorated. The product did not grow as hoped, and annual sales revenue did not grow beyond the initial level. The supplier’s typical customer revenue is significantly larger, so the relationship was no longer a good fit.

Proper project administration on both sides was absent, which was doubtless the real primary problem. As a consequence, issues lingered without resolution, the main one being occasional slow payments. The supplier had irregular cash flows and no reliable system for invoice payment, the customer did not have a statement procedure, nor a regular followup system when payments lagged.

Several times during the past 3 years both parties got together to try to correct their problems. The customer pledged on these occasions to pay within desired terms, but after a time failed to do so. After several such occurrences, the supplier finally lost patience and “fired” the customer. Tooling for the parts fortunately belonged to the supplier, but releasing those tools became subject to resolution of several issues. Thus, finding a new supplier presented a real challenge to the customer company. We were contacted to help.

We had no appropriate supplier in our network, but found 3 potential candidates within 2 weeks. In the meantime the customer got a financial professional to help negotiate a termination with the original supplier so that tool release would not be a problem.

Our role was not only to find a suitable new supplier, but construct a plan to eliminate the issues involved in the customer firing. To that end we got agreement from the customer to provide a blanket order with specific periodic releases and a firm payment schedule. The supplier agreed to issue a regular statement and to include us in the distribution so that we can assist with any issues that arise for either party. This is a role we are happy to fill.

The customer has a more appropriate size supplier and a new start with an important relationship. The original supplier cleared its books of a nuisance customer. All parties are now whole, and better situated for success in the future.

Proficient Sourcing’s role is not only to help with finding a suitable supplier fast, but once found, to assist with the relationship so that it works over time. We can put these skills to work for you if you have a similar need, and would welcome the opportunity to do so: (513) 489-5252 will begin the process!

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