Leveraging the Supply Chain to Offset Rising Raw-Material Costs
Imagine this scenario: A manufacturer lands an order with a major retailer based on the current cost of the raw materials. The actual purchase order doesn’t show up for three months—but by then, the price of the raw materials has climbed 30 percent. The manufacturer, who had originally planned for a 25 percent margin on the order, goes back to the retailer to try to renegotiate the price. The retailer refuses and threatens to never do business with the manufacturer again.
“So they have to go out there and produce this order, go through all this work and heartache and tie up all this capital— and make nothing,” said Mark Burstein, president of sales and marketing for New Generation Computing.