In your Sept. 29 issue you had a story that SMS Plastics Technology is asking its suppliers for a 7 percent rebate a la the Big Three [“SMS seeks rebates,” Page 1]. Recently I received a form letter from a large client. It started with “Dear Preferred Supplier.” It applauded my excellent contribution to the company then politely asked me to kick back 5 percent of the past year's billing to help improve their profit and lower my rates in the future. I politely declined. They responded that there were others who would work at a lower cost. I responded by wishing them well in their endeavors, mentioning you always get what you pay for.
What the “giveback” folks don't really understand is that to be a Tier 1 supplier, you not only have to be the lowest bidder, you also have to have a record of excellent deliveries and obsessive quality.
While I am all for profit, does it make any sense to endanger the supply base that contributes to your own profit?
Sure, there are dozens of others who want the business. But the current supply base got that way because it worked hard to meet its clients' needs. The other guys didn't.
Why ask for just 7 percent? Why not 30 percent? If you are going to pull the business, why not just do it?
If you put your suppliers out of business, you have to find new suppliers anyway.
Sometimes it is laughable to look at the arrogance of the folks who greedily insist on the short-term gain, not realizing they'll bleed to death in the future from shooting themselves in the foot today.