Dabbling in the Supply Chain

Getting serious with the Supply Chain? Nah! Let’s play shenanigans.

Squeezing small customers for “rebates”

“Big businesses are pushing hard to wring profits out of the smaller companies that supply them with goods and services,” reports The Wall Street Journal.

Accounts receivables are prepaid by financial service providers against a fee, however, the customer (debtor) gets a cut on that fee, called rebate. While there are some financial accounting implications the accountants are wrangling about, I am left wondering: are we not in the middle of a supply chain crisis?

Instead of devising clever schemes to press a few more cents from the small supplier, would it not be more profitable to create a partnership and bake a bigger cake, i.e. make sure the right products are delivered on time, in full, at the lowest cost? Let’s start with baby formula.

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