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<blockquote data-quote="Raven Crowking" data-source="post: 3617173" data-attributes="member: 18280">My understanding of it is that it is actually a lot worse than this.BIG BOX takes a look at Small Manufacturer.&nbsp; BIG BOX orders 400,000 or more units from Small Manufacturer at a minor discount compared to that of other buyers (say your 90% of X).&nbsp; BIG BOX has a contract with an option to renew, say in August of next year.&nbsp; Small Manufacturer is excited because they've just hit the Big Time!So next year rolls around and its March.&nbsp; Small Manufacturer wants to settle the new contract.&nbsp; BIG BOX puts it off.Now it's June.&nbsp; Small Manufacturer has to start planning its production schedule.&nbsp; BIG BOX puts off the contract, but is very, very positive.Now it's July.&nbsp; Small Manufacturer has to buy things to manufactor in August.&nbsp; It has to invest now if it can make the sale then.&nbsp; BIG BOX is still putting off the contract, but all the reps talk like its a sure thing.Now it's August.&nbsp; BIG BOX agrees to a new contract only if Small Manufacturer cuts off another 50%.&nbsp; Small Manufacturer has already invested; the only way they can stay in business is by signing the contract.Oh, yeah, and this is a five-year deal.</blockquote>

[QUOTE="Raven Crowking, post: 3617173, member: 18280"] My understanding of it is that it is actually a lot worse than this. BIG BOX takes a look at Small Manufacturer. BIG BOX orders 400,000 or more units from Small Manufacturer at a minor discount compared to that of other buyers (say your 90% of X). BIG BOX has a contract with an option to renew, say in August of next year. Small Manufacturer is excited because they've just hit the Big Time! So next year rolls around and its March. Small Manufacturer wants to settle the new contract. BIG BOX puts it off. Now it's June. Small Manufacturer has to start planning its production schedule. BIG BOX puts off the contract, but is very, very positive. Now it's July. Small Manufacturer has to buy things to manufactor in August. [i]It has to invest now if it can make the sale then.[/i] BIG BOX is still putting off the contract, but all the reps talk like its a sure thing. Now it's August. BIG BOX agrees to a new contract only if Small Manufacturer cuts off another 50%. Small Manufacturer has already invested; the only way they can stay in business is by signing the contract. Oh, yeah, and this is a five-year deal. [/QUOTE]

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