The Commercial Decision

This has been something I have meant to write about for a while. It will be short and sweet. I was reminded of it by a client of mine, who has come to this crossroads.
In apparel manufacturing, mistakes are often made, and in some cases they cannot be rectified, without delaying your shipment.
Thus a decision needs to be made as to whether or not to accept the mistake. Will the mistake have material impact on sales? This is what I define as the commercial decision, and have faced it numerous times.
A recent example was for yarn dyed shirts. As these were what is known as “engineered”, it means when the front panels are sewn to the back panels, the stripes need to line up. Buyers pay a higher price for these items, as there is more wastage, than if the stripes did not have to line up.
On seeing the final product, I noticed that the stripes did not line up. Decision time. I decided that a 0.5 cm deviance, was commercially acceptable. Most items fell into this. The supplier breathed a sigh of relief. This was short lived, as I then required a 30% discount, or would cancel outright. “But why?” bleated my supplier. Answer; “You did not show the correct care when manufacturing my order, and you cocked it up. You need a reminder, not to do it again”.
He took the hit.
Never accept something a manufacturer does, that is incorrect, even if it will not have a material impact on your business. There has to be a penalty involved. Otherwise you are setting a dangerous precedent, for two reasons.
Firstly, the supplier will see you will accept sub par goods, and he will see $ signs, knowing he can cut the corner on purpose next time, and you will accept.
Secondly, if it does happen again, he has the “But it is minor problem, and last time you accepted it.” argument.
You also set the precedent that you are serious, and not to be trifled with. Manufacturers love to cut corners, and the only way to penalize.
Whether it was a genuine mistake (I always give the manufacturer the benefit of the doubt), or not, it is neither here nor there. A mistake was made, and someone needs to take responsibility. In this case the factory owner, for not showing proper care.
As a buyer there is pressure to buckle if the mistake is not material, as you are under time pressure. Do not try to negotiate a discount, as the manufacturer knows you are under pressure. State your terms and walk. If the manufacturer comes with a counter offer you feel is fair, accept. But, do not waste time in protracted negotiations, over this. The only thing you need to say is “no”, until an acceptable settlement is reached.
If it destroys your relationship with the manufacturer, you have back ups for your next orders (if you followed my previous advice, that is).
Such is the nature of this beast.
Till next time.

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