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Naughty tactics some suppliers use to maximize profits

by Etienne Charlier

Stephen Ashcroft, from the procurement and supply chain consultancy Brian Farrington, has written an interesting post listing naughty tactics some Western suppliers are using to maximize their profits: “The naughty vendor checklist“.

A supplier’s contract delivery team is not only measured on its ability to ensure customer satisfaction, but also on the profitability of the contract as a whole. While it would be unjust to suggest all vendors will seek to abuse the relationship to maximise profit, the buyer’s contract manager must be alert to this possibility. The key to ensuring this does not happen is control, through effective contract management.

Stephen compiles a long list of supplier tactics he has witnessed.

While I was reading his post, I could not help but think that many Chinese suppliers have studied the list in all details a long time ago!

So I decided to put side by side Stephen’s list and a list of the tricks that I know many (questionable) Chinese suppliers will attempt if the purchaser lets them get away with it.

 

The situations related to payment terms at the “Chinese Poor Supplier” side relate to export business only. Payment terms for China domestic business are very different. I also skipped some of the original list when I could not find a related “Chinese trick”.

The main point here is that, in China or in the West, purchasers really need to actively manage their suppliers to avoid the worst of these tactics.

And in conclusion, it is important to note that beside these typical “poor Chinese suppliers”, many good suppliers operate and serve their clients well in China. Some of them are striving to improve and secure margin by moving up the chain and by increasing efficiency. Like always, China displays the best and the worse next to each other.

If you have other “naughty” situations you want to share, do not hesitate to connect through Twitter, Google+ or LinkedIn.


Etienne Charlier is the founder of procurAsia and assists companies in sourcing industrial equipment and parts from China.  He writes about sourcing trends and practical tips on his China Industrial Sourcing Blog. Etienne lives in Shanghai since 1995. You can contact him here.

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