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  1. #21
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    Quote Originally Posted by motion guru View Post
    We order parts like this often - and the order confirmation from our supplier states that they will ship per our purchase schedule.

    This would be for things like Exlar servo gearmotor actuators which run about $4k each - we would order 50 or 60 and take them 10 or 15 at a time. Our supplier never blinked on orders like this and even accommodated the odd delay in shipping when we would request it due to project delays from our customer.
    I don't think what you do is uncommon and you are ordering a total quantity at one time. It's up to the supplier if he wants to make everything at one time or as needed. Making everything at one time could save quite a bit of money depending on what's ordered.

    I don't think the OP felt he was in that situation. His situation felt more as some kind of maneuver to get a cheaper price.

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    Quote Originally Posted by g-coder05 View Post
    Iv'e seen this a thousand times if i've seen it once. Customer gets you to bid a large quantity then comes back wanting to deal on a smaller amount. Just remember, that PO is just a paper. The whole purpose of them having you quote 50 of each is for you to set up once and run 50. Sure, you could run 50 and hope they buy 40 more later, but do you want to sit on their inventory hoping they will take the rest on their word and a non contractual piece of paper? This is just a common tactic, they know what they are doing......

    That paper is just as worthless for the remaining 40 as it is a bulk shipment of 50.

    In this case, you need to quote it as:

    10 pc one-time-buy
    50 pc one-time-buy
    50 pc blanket - over X shipments over X time.

    The blanket would likely be in between the other two on price.


    I would expect payment in 30 days from each individual shipment.



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    Ox

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  4. #23
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    Quote Originally Posted by plutoniumsalmon View Post
    Hello All.
    Can you please tell me how you would handle this situation. I quoted a customer for 50 pieces of each part as they requested. They responded with a possible po where part delivery will be every month for 10 at a time. What should I do? I can cut them all and hope they don't cancel or charge them more to make 10 at a time? The parts do not take a whole month to make. Should I also ask for payment each time I deliver?
    Sorry if this is captain obvious.

    You quoted to their quantity, 50 pieces, right? I would just tell them you need to requote because your setup/materiel (however you need to tell them) costs are different for 10 pieces than it is for 50.

    Of course I am playing armchair quarterback without knowing the details, but you did ask.

    Wait until you get a customer "demanding" you keep up with their orders or else. Then when you accomodate they bail 3 months later.

    You (me, we) can't do this for any other goods or services. Go to the gas station when gas is "cheap" and tell them you want 50 [email protected] $$, but only getting 10 gallons/week.

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  6. #24
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    Quote Originally Posted by Mike1974 View Post

    You (me, we) can't do this for any other goods or services. Go to the gas station when gas is "cheap" and tell them you want 50 [email protected] $$, but only getting 10 gallons/week.

    Sure you can.
    Maybe not from your local distributor, but you can buy 5 lots of crude oil on the futures, and sell off 1 lot each week or as you use it.
    If you pay more at the pump, you should likely receive more for your lot of crude to a similar amount.
    This locks you in to the price that you considered "cheap".



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    Last edited by Ox; 09-03-2019 at 11:54 AM. Reason: added

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    Quote Originally Posted by Ox View Post
    Sure you can.
    Maybe not from your local distributor, but you can buy 5 lots of crude oil on the futures, and sell off 1 lot each week or as you use it.
    If you pay more at the pump, you should likely receive more for your lot of crude to a similar amount.
    This locks you in to the price that you considered "cheap".



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    Think Snow Eh!
    Ox
    yup, the farming community around here buys bulk, they get together and negotiate a price.

    One price is one large buy, delivered at certain date (tanker load)
    Next price is "promise to buy xxxx gallons by end of year"
    Next price is "Rack plus xxxx" delivered anytime during the year.
    Also, "pay at pump" is a special price "Rack plus xxxx"

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    I would tell them I need to requote forsure. Seen this shit way to many times. I am not in here for working for nothing.

    Sendt fra min EML-L29 med Tapatalk

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    Quote Originally Posted by Ox View Post
    I would expect payment in 30 days from each individual shipment.
    Expecting payment and actually getting it are two different things. Just sayin.

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    Glad to see you back Phil.


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    Quote Originally Posted by Ox View Post
    In this case, you need to quote it as:

    10 pc one-time-buy
    50 pc one-time-buy
    50 pc blanket - over X shipments over X time.
    This. Also, for the blanket order. Don't forget to add in an inventory charge for having parts sit on your shelves along with an added charge for interest on dollars tied up in the job. These should be hidden in the quote.

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    I have not seen much discussion of "must buy" contract language.

    For instance, customer agrees to the above terms, but then changes part design midstream of your contract.

    Customer refuses to take the balance of parts (finds new lower cost source)

    How would these examples be addressed ?

    "Buy out the contract" ?

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    Quote Originally Posted by digger doug View Post
    I have not seen much discussion of "must buy" contract language.

    For instance, customer agrees to the above terms, but then changes part design midstream of your contract.

    Customer refuses to take the balance of parts (finds new lower cost source)

    How would these examples be addressed ?

    "Buy out the contract" ?
    You can try and write your contracts that way but enforcement of the contract is the problem. Is it going to be worth it to hire a lawyer to try and pursue payment? Is it small enough to try and take to small claims court yourself (what is your time worth?).

    I personally think it's best to try and manage a job so that you aren't in to it so much that it would hurt if things went south. Not always possible but still worth trying for.

    JMHO

    -Ron

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    Quote Originally Posted by MetalCarnage View Post
    I personally think it's best to try and manage a job so that you aren't in to it so much that it would hurt if things went south. Not always possible but still worth trying for.
    Agreed. Let's take it one step further and get paid COD.

    I personally think the accepted practice of financing your customer's business is retarded ie stretching out payment terms. The bigger the customer, the more they want to stretch payment. It's free money in their pocket.

    I'm a COD type of operation and I'm only a part timer, but I am not willing to finance my customer's operation to the detriment of my own. You want parts, you pay for parts. It's that simple.

    Once the parts leave my hands, the customer is in complete control and my leverage to get paid is gone.

    I just took on a new customer two weeks ago. I was up front with them and said check or VISA accepted when I drop off the parts. They were cool with that and sure enough, the owner cut me a check both times I dropped off his parts. No excuses and no bullshit. I told him I will keep making him parts with the short lead times he requires if he keeps paying me upon delivery. Quality parts with a short lead time is the key with these guys. They are not shopping on price.

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    Quote Originally Posted by Philabuster View Post
    Agreed. Let's take it one step further and get paid COD.

    I personally think the accepted practice of financing your customer's business is retarded ie stretching out payment terms. The bigger the customer, the more they want to stretch payment. It's free money in their pocket.

    I'm a COD type of operation and I'm only a part timer, but I am not willing to finance my customer's operation to the detriment of my own. You want parts, you pay for parts. It's that simple.

    Once the parts leave my hands, the customer is in complete control and my leverage to get paid is gone.

    I just took on a new customer two weeks ago. I was up front with them and said check or VISA accepted when I drop off the parts. They were cool with that and sure enough, the owner cut me a check both times I dropped off his parts. No excuses and no bullshit. I told him I will keep making him parts with the short lead times he requires if he keeps paying me upon delivery. Quality parts with a short lead time is the key with these guys. They are not shopping on price.

    There's always 2 sides:


    COD is only 1/2 way between delivering good parts, and not getting paid.
    We are not in a commodities business here. If your customer (?) does NOT pay you COD for the parts, then what?
    You're not going to take them to BIg Lots and dump them off at 1/2 rate.
    They are simply $.05/# at the local yard, or at best - you could have them plated up really nice and use for Show & Tell parts on sales calls for the next 15 years...
    If you really are concerned about never seeing your cheque, then you really need to consider cash up front.


    On the fact of losing control once the customer has the parts - sure, but once the customer has paid for them, they now have lost incentive to get replacements or modifications for junk or out-of-spec parts. (not that any of us here have ever made such a part)
    This business transaction and risk thing goes both ways, and it's not always the seller that gits screwed.


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    Quite a few more than one times, I have told new customers asking for similar arrangements:
    "what you need right now is a bank, not a machine-shop". This always goes over like a lead balloon.
    In the same breath though, I also have customers I have no issues banking parts for.
    But, the relationship has to be established first. Every situation is different.

    If it is work that really fits my shop (and I want it), I will ask the customer for a compromise:
    "You supply all the material up front. And, I will deliver on your desired schedule".

    Then it is up to me how I want to run the parts. If I am busy, I can only run enough to satisfy their needs.
    If I am slow and need filler? I can bank some of their parts. At least this way I am only out payroll if they flake.
    And, I don't have to deal with the double insult of having spent $$$ on their material.
    I just ordered 700lbs of 6061 for this exact situation yesterday. He payed the material invoice this morning.

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    Hi Wheelie,
    First post but I was following your shop thread a year or two ago until my own shop started to suck up all my time. Glad to hear you’re still going.
    We do subcontract design and assembly work here in the UK and have blanket orders set up with both suppliers and customers. They are all based on trust and often were not our first dealings with the other firm.
    I also make a point of asking for call-offs at the RFQ stage so that the supplier has a chance to price in some risk.
    If your customer is pushing you for a low price and then asks for good terms now, I doubt they’ll be much easier to deal with once they have to part with their money.

  20. #36
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    Agree to the terms.

    Don't make the parts.

    Have them meet you in an alley to pick up the parts. Ask them to bring cash...

  21. #37
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    Blanket orders can work well for both parties involved.

    Or they can fail miserably...depends on how they are setup and by who.


    When one of the parties does not live up to their obligations it can go south quick.
    We were makes parts and the customer was increasing getting behind on his net/30 payments. A couple warnings then I stop making parts...till they get the idea and all of a sudden they want to renegotiate...not the way it works.


    I do this with several other companies and it works out great. I know I have work, I can always add a few bars of stock onto any order to bump up the delivery quantity and get a better price. I can run parts if we are slow, have an open machine or the jobs timing just fits in well. I can build up stock so if busy I do not have to make parts then...just ship from stock. Customer gets a great product at a great price and on time. We are both happy campers.

    In the end it has to work for both.


    50 piece price, but only take 10 at a time. Depends on if its something that works for you, if you see potential to grow with the customer. Go into it with just making 10 and break even...see if you get the check on your terms, see that it clears...make 20, deliver 10 hold 10...see how they pay, see if check clears...all good make balance and see if the order repeats or develops.

    PO with all the details in writing. Tweak as needed is fine

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    Quote Originally Posted by Mike1974 View Post
    Go to the gas station when gas is "cheap" and tell them you want 50 [email protected] $$, but only getting 10 gallons/week.
    Yes, you can do this.

    Not so much 50 gallons bought, but in quantity.

    Some of the larger boats do just that. Buy several thousand gallons at a fixed price, then come in take a thousand gallons or so as needed. If not it pays for them to run elsewhere for a trips fuel at a better rate.

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    Quote Originally Posted by SIM View Post
    Yes, you can do this.

    Not so much 50 gallons bought, but in quantity.

    Some of the larger boats do just that. Buy several thousand gallons at a fixed price, then come in take a thousand gallons or so as needed. If not it pays for them to run elsewhere for a trips fuel at a better rate.
    Lots of larger customers do the same thing. Farmers come to mind. Lock in their diesel price when it's low and setup a contract buy for the next 10,000 gallons. Same with propane. Buy 5,000 gallons in the summer when the price is low.

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    Fuel bank...........this outfit has been operating in my neck of the woods for 20-25 yrs or so..................buy all you want up front. Every now and again you here of some old jigger who still has a few thousand gallons he bought in the late 90's for $.90/gallon.

    https://www.firstfuelbank.com/


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