Do you feel in recession?

[Styleww 10]

In my personal life yes! lol

 

 

In my business life no!

 

Lol Jamie,

 

As people have said it depends on your industry , i work for a few companies including my own and it does vary from each industry.

[Chez2 10]

L00b I disagree with your comments and agree with sportstrophy. I will try to explain without being too specific but I have seen this happen.

 

Some of my customers (in a previous employment) produced various chemicals which were used in other manufacturing processes. Their customers started buying from the far east so a lot of similar UK manufacturers closed. Eventually the prices in the far east were hiked up. Those 'lost' customers came back to one of my customers and asked them to diversify back into producing their old products as they were now too expensive to buy overseas.

 

I know this is all about cost savings, supply and demand but what I'm trying to say is that in the long term the buyers that went overseas shot themselves in the foot by killing the uk producers.

[Cyclone 10]

How did they shoot themselves in the foot, they'd have gone out of business if they'd not taken advantage of a cheaper supplier when it was available.

[steveroberts 10]

L00b I disagree with your comments and agree with sportstrophy. I will try to explain without being too specific but I have seen this happen.

 

Some of my customers (in a previous employment) produced various chemicals which were used in other manufacturing processes. Their customers started buying from the far east so a lot of similar UK manufacturers closed. Eventually the prices in the far east were hiked up. Those 'lost' customers came back to one of my customers and asked them to diversify back into producing their old products as they were now too expensive to buy overseas.

 

I know this is all about cost savings, supply and demand but what I'm trying to say is that in the long term the buyers that went overseas shot themselves in the foot by killing the uk producers.

 

This is very relevant where a supply chain is very limited. The major airlines don't always buy the best new airliner from, say Boeing, if they think it would jeopordise the longevity of Airbus. They want more than one supplier to make sure they are never held to ransom for the reasons you explain.

 

However I do understand why the customer, you mention, did what they did to ensure their own, short term, survival.

[Chez2 10]

Cyclone - Steve has explained it for us. I don't agree that they needed to buy cheaper to survive though. Sometimes you need flexibility and the smaller Uk suppliers were able to do small batches quickly exactly to customer specifications. The overseas supplier just churned out the same material in bulk.

 

Its common in my industry not to put all your eggs in one basket. A lot of people split their business between two suppliers, even for waste management. If they only use one supplier and something 'happens' then it can have a major impact on their own business, including ceasing production for a while.

[Cyclone 10]

He's explained why you might stick with a particular source if there were literally only 2 in the world... Not why for a commodity you would.

 

Lets consider what would happen if there were 5 companies that bought widgets in order to make their product (these companies are competitors). An overseas supplier contacts all of them offering to sell them widgets cheaper than they can currently get them.

4 of the 5 companies refuse out of loyalty to their country or something. The 5th one jumps in with both feet.

 

The 5th company now has a major advantage over the other 4, it cuts prices in order to aggressively grow market share. The other 4 companies loose orders and market share and profit and quite quickly go bust....

 

That's why it's buying cheaper is needed to survive, if you don't a competitor will and at the very least they'll squeeze your margin, and if smart they'll steal your customers and drive you out of business.

[L00b 441]

Chez2, your position is not (so much) at odds with my post. It dovetails into:

 

"Nothing to do with eyes shut, all to do with business competition and opportunities (...)"

 

and

 

"But they [NDT: UK businesses, in context] know how to make better/smarter/etc. 'things', because they've been at it some centuries longer than the up-&-coming countries: that's the main advantage for staying 'on top', and -most importantly- to try and upkeep (...)"

 

The situation you describe is of a business that is sufficiently in tune with its customers and suppliers to shift production means/procedures according to market developments (be they cost and/or supply quality and/or <insert further variables here>).

 

The situation Sportstrophy suggested was of a UK business which should not look beyond its navel (local resources) for maintaining international (or even national) competitivity. Whereby my comments. EDIT - and per Cyclone's example above.

 

Note that both are anecdotal...but symptomatic

 

My point was, and remains, that there is no "universal truth" that things are always better-made at home: as with all things business on today's global scale, it's a constantly-evolving landscape, in most fields of business, and those businesses that "do best" are those which pro-act/react fastest.

 

EDIT - per Cyclone's example above. Cyclone's 5th company will do better than the other 4, for a while...or forever:

* if supply issues occur, then the other 4 might pip the 5th back in the marketplace.

* however, if there are no supply issues, or they happen 'too late' as regards the other 4's sales/profitability/cashflow by that time, then the 5th will do e.g. what your customers did to 'solve' them, still staying 'on top' of the other 4.

 

Swings/roundabout, but only evolving businesses survive - that is a "universal truth"

Edited April 27, 2012 by L00b

[Chez2 10]

It depends how you define commodity. Some recycled waste is classed as a commodity. You can sometimes get the best price overseas when their need is great but they can switch on and off at short notice. Most businesses need contunuity of supply so my point was to play the two markets by tapping into both. I've seen it happen many times in my industry so I'm speaking from experience. Its okay saying you go for the best price but if that route is suddenly switched off then you have no way to continue your business. Best price doesn't always give continuous supply and hence a competative business.

[Cyclone 10]

It makes sense that you would keep both channels open, particularly if there is likely to be volatility in the availability of the supply.

I'm sure that most business people are capable of understanding this and wouldn't deliberately put themselves in a position where their 'cheap' supply might suddenly be cut off and no alternative exist.

[Chez2 10]

It makes sense that you would keep both channels open, particularly if there is likely to be volatility in the availability of the supply.

I'm sure that most business people are capable of understanding this and wouldn't deliberately put themselves in a position where their 'cheap' supply might suddenly be cut off and no alternative exist.

 

You would think so but they don't. I still see it happening now. They just see the price and don't take everything into consideration. Once they have been let down some of them change the way they do their buying or selling.

[Cyclone 10]

Of course there's no more of a guarantee that a UK provider won't let them down than an overseas one, so what basis should they be making a decision if not on price?

[L00b 441]

Of course there's no more of a guarantee that a UK provider won't let them down than an overseas one, so what basis should they be making a decision if not on price?

Depending of course on what is actually bought:

* Quality for price (more for less, when do clients don't ever seek that? )

* Company viability (CH accounts or Red Alert for UK-based)

* Turnaround/Reliability of supply (consistency of service, basically)

* Payment terms (30/60/90 days and 'elbow room')

 

Speaking as a supplier, there will of course be a 'wiggle' element to all or some of these depending on how the client fares on same parameters. E.g. payment on account first if the client looks unviable, less (eventually no-) service if the client is consistently late paying, etc.

 

Nothing new or surprising there.

 

We've strayed a fair bit O/T here. IMHO, where the recession is felt, or comes into it, is in quality for price, viability and terms.

 

Many clients' terms have been downgraded ('brought forward') as a result of our own viability matrix for them. We've lost some business as a result (we lost more, in fact most by far, business through clients going to the wall in 09/10, TBH), but in parallel (and as a corollary) reduced our cashflow exposure and credit control requirements, and freed up our main resource (our time) for maintaining & improving quality for remaining and new clients. Basically, the recession has coerced us a little further into best practice, and to be more pro-active with 'problem' suppliers and clients (getting rid).

Edited April 27, 2012 by L00b