Unscrupulous Buyers

[AArdvark]

Recently I noticed an intersting thing at work. There's this one company that always has issues with our production / delivery schedule. It seems that we always make less stuff than they order. There's a quantity of parts ordered and it's always crossed off by the owner and a smaller number is hand written in. I got curious and finally asked why. So here's what happens....

If you are a buyer for a large, oh lets call it a bus manufacturer, and you need all the parts that go together to build a bus, your job is to go around to all the suppliers and buy those parts. So let's say you need frasik boxes. A frasic box is an imaginary fabrication that goes underneath each bus when it it built. I could use the term widget but that's already overused, I like frasic boxes. So you're the buyer for these frasic boxes. You call up a supplier company and request a quote for five, ten and twenty of these frasic boxes. The company will reply with a price quote for building five or ten or twenty of these boxes, each quantity is adjusted for price, as it's easier to build a lot of frasic boxes than it is a smaller amount. Now the unscrupulous buyer, who really only needs ten boxes to fill the bus contract, will ask for twenty boxes because the price per box is lower. The buyer can then go back to his boss and say: "look, I got a good deal on these frasic boxes, please pat me on the head."
So what happens is that the unscrupulous buyer will say to the supplier: "well, we need ten of them in a month and the other ten sometime next year." Now, this is all prety much verbal at this point, because they really need the supplier to start working on the frasic boxes. The official purchase order will show up in a week or two. So the supplier buys the materials to make twenty boxes and work begins. The first ten boxes are made and shipped out. Sometime next year goes by with no word on when they will need the other ten boxes. "Oh, that contract got put on hold," is the reply when asked about finishing the order. The truth is that they don't need the other ten boxes and the buyer only asked for them to get a lower price. ( there's a clause in the purchase order that says if the contract gets put on hold they don't have to pay the supplier until the parts are needed) So the supplier is left holding the bag for ten boxes they cant sell, and that includes the material and labor hours involved in putting the boxes together.
This happend so much with this one company that the owner wont make all the parts requested. They have us build maybe half of
the requested amount, wait for those parts to get paid for and then agree to make more if and when the buyer asks.

THE
DRIP FEED
AARDVARK

[Casual Observer]

The software company I work for has similar buyers in that they will try to overestimate the length of time they'll need the software for their clinical trial, hoping to get a better deal. Then they look at the contract which requires annual prepayment and services paid before the work starts and they come back to me saying stuff like "well, if our trial doesn't last as long as we estimate can we get a refund?" NO. They can only use what they've paid for another trial or they're shit out of luck. Plus, all services fees must be paid before we start our folks working on it. I deal with it by telling them to give me the minimum length they think they'll need and still get them a discount that they want.

Why can't your shop's owner change the contract so they can't get out of it? Is there too much competition to demand upfront payment? I'm sure "bus companies" have lots of contracts that they can't get out of.