|Home » Forums » Business » Message||Login|
You are not logged in. Consider these WOODWEB Member advantages:
Bidding on fixtures we currently build9/24
We have an ongoing business relationship with a local company that has expanded nationally. As they have grown, so have we, and they are our primary business. For 15 years we have been building very product-specific display fixtures for them. They have never in the past hinted that there is any issue with price, quality, or timeliness of deliveries. The designs have been a collaborative effort between us and them. A few weeks ago, they asked for shop drawings of our fixtures. Without prior notice, this week we received a bid package that included our fixtures. Due to timing of request of shop drawings, we assume they wanted them in order to produce the bid package. Since the designs have been developed mutually, we are questioning the ethics of it being put up for low-cost bid without them at least trying to negotiate a lower price with us up-front.
Anyone else have this happen to you? How did you handle it? Should we try to approach the company about this?
You should definitely go to them and ask what you can do better. You have a long and successful relationship with them but something is obviously not working on their end.
This may be something you have done or not done or it may be an initiative someone in their company came up with.
I wouldn't spend much energy trying to evaluate the "ethics" of them sending out plans you helped develop. They obviously do not share this viewpoint. Work on the things you have some influence over, not moral turpitude.
Usually when this happens it is because someone new is on the scene, usually a purchasing agent.
The new person inevitably thinks he can do a better job than his predecessor.
I would try to find out who that person is and sell them.
Unfortunately this usually does not turn out well for existing shop i.e. you.
Generally having all of you eggs in one basket is not a good idea. Hard though not to.
You need to find some more clients and fast. This is a case of "All your eggs in one basket" and you need to find a lot of other clients so that you don't get hurt when they pull the plug
Get out of your own head. Ask the person at that company the correct questions and he/she will give you the correct answers. Pat may be right. It sounds like something major in their company has changed. Before you go throwing them new numbers, find out what dynamic is at play.
The collaboration was for your mutual benefit along time ago. You were working for them, not with them. We often enter in relationships that seem equal; however, there is always someone in the lead position and they own the rights. Don't waste your time or energy even thinking about it. Think about today not yesterday.
They already have your price. I had the same thing happen with a display rack customer. I have built over a thousand of them over several years. They wanted the Cad files so they could price out some other shops. Now they are back and happy to use me. It's only about 20 percent of my work so I can make it without them easily. It is probably growing pains on their end but you need to focus on more small customers rather than one large one.
About a million years ago there was a thread on this forum about what constituted yellow flags in contingency planning.
A lot of entrepreneurs are very optimistic. They don't plan for failure because "there are no such things as problems, only opportunities". Because problems don't exist in their world they can't recognize them when they show up.
There are three basic epochs to this story. The first one is the one you sleep through. Problems don't exist so you don't think about them. The second phase is when you wake up and realize the boat is sinking and you try to figure out a strategy.
A smarter businessman has a contingency plan in place. Part of this process is proactively defining what exactly constitutes a problem. An example of this might be if more than 50% of your work comes from one architect or one builder. Another metric might be the size of the project relative to your biggest job you've ever been successful with before. There are a whole lot of possible definitions to this. What is important is to have them proactively defined before they show up.
The smart businessman can recognize a yellow flag. When he sees one on the horizon he goes over and stands next to the red lever. If a yellow flag pops up he immediately pulls on the red lever. This red lever may not be enough to right the boat but the sooner you can implement corrective steering the better off you usually are.
In my case the problem was the contractor I was doing most of my work for was growing too quickly. You would think this would be good for me but in fact it was the opposite. In order to grow they hired new managers and these new managers brought their own team with them. Up until that time this company had constituted 80% of my volume. I was constantly turning down other contractors so I could service this account
Fortunately for me this happened after the original dialog about yellow flags. As a consequence of that dialog I had cut that contractor back to only 50% of our plate.
The new contingency plan defines a simple smile as a yellow flag because I have learned you can never trust the contractor with the big grin.
At a business seminar Orville Redenbacher said " Put all your eggs in one basket. And then, watch the ******* basket." You need to know what is going on with your client and your drawings. What kind of lead times do they work on and how locked in to the design are they? If they can order 12-14 weeks ahead and in some volume and keep to their design your drawings may be somewhere in Foshan. Is it the new guy in their organization promising a 15% savings over the guy that has "had it made" all these years?
I've been there, probably many small shops have. We lost all of one client's business, about 50% of ours, when they were bought out by a large national. We lost another 25% about the same time when that company was bought by a foreign conglomerate and all the fixtures went to their exiting suppliers. To make matters worse we had agreed to significantly increase production due to the current management's expansion plans. We had bought a new bander and beam saw for that. The lucky part: I pay cash for everything, nothing financed. But keeping the employees proved expensive.
Am now careful about where the eggs are.
Why would you assume the reason the other guy in this transaction can do it for less money is because he is cutting corners?
There are only two pertinent things about your situation.
1) There is a new purchasing agent and he wants to score points by doing better than his predecessor.
Admittedly this is a dumb ass move but they ALL do it.
2) You have all of your eggs in one basket. Of which everyone will say what a stupid thing to do that is. But when you are in this situation it is lot harder not to do than it looks. Even the big dogs get into this situation.