International Business

So you held out a finger they could grab ...

... and now they took the whole hand. Not a good sign.

I'd politely say something like "After careful consideration we are sorry to inform you that we are unable to ...".

Also, if you are their sole source, what's there to lose?

Someone might be able to make a case that their customer owns the design having paid me to design it. It would cost a few bucks to put it into production, so they have little interest in doing that. The middle guy is a very large international contract assembly house who knows nothing of this of course. I don't know how they would feel about doing the board fab if they did know. I doubt they could do it any faster than I can and likely not much cheaper at these volumes.

So I want to keep my head down and not cause them to complain up the food chain to their customer who might start to think of alternatives like cutting me out of the middle.

I put a lot of sweat equity into the design phase, not charging them for mods and spec changes and supporting them 110% in the testing phase. Heck, when they came back for a redo on the board and FPGA I did it at about half cost because I didn't think they would go for a higher price.

Lead time has always been an issue, but production has been rather light. After some four years it is ramping up and I don't want to lose what will finally be a paying cow if not a cash cow.

Another couple of years like this one and I may be able to retire. :D

Don't be "nice" to a customer outside of what you're contractually obligated to do unless you're willing to write it off to either marketing or goodwill.

What's in the original contract? That should spell out who owns what. If it doesn't, check with your lawyer.

I'd agree with that. Looks like they are trying to have Rickman over the barrel, like people in the automotive business often do. Reminds me of this guy who forced suppliers down to their knees:

What contract? They gave me a PO and I did the work, mostly on a handshake. "Lawyer" is the key word here. At the end of development, I gave them the schematics, FPGA source and possibly the Gerber files. If they start making the boards how would I stop them... or even know?

There's no barrel here. The middle man knows nothing of my arrangement with their customer. Ssssshhhhhhh.

They call that "lean" and many businesses are always looking for away to be able to operate with out having any inventory and expect suppliers to bend to their will.

It was and still is being tried where I am currently employed. THere is one thing I can say about it, it drives the prices up ski high and reduces the availability of what ever..

Don't bend to their will, it wouldn't matter either way, they'll screw you any way.. Triple the price for your product to them, and sell it much cheaper elsewhere.. They'll get the message, as my employer is is quickly finding out.

They call that greed and currently, there is lots of big business that do not even see the products they sell, the bean counters just see numbers.

Jamie

Having managed to avoid nearly all "business" and "management" training, even I've heard the "fresh orange juice" story.

Sure, the customer can have whatever is possible and legal, including same day delivery by a dancing white elephant. They just have to pay for it.

They often know more than you think. But even if they didn't, the typical scenario is this: Someone becomes nervous because they don't have a warm-and-fuzzy about a supply situation. That nervousness might not be waranted at all, but still. So, someone else gets tasked with salvaging the project at their end. He or she will take inventory and see what's there. Schematics? Gerbers? uC code? Maybe even source code? If something is missing they'll try to find out how to get it while kicking up the least amount of dust. Once it's all in place they'll stand on the door mat of a contract assembler.

What they often don't see is how valuable it would be to have the original designer in the boat. That kind of visibility goes way up when something hits the fan down the road.

They paid you money, and you delivered stuff. Absent a contract, they can probably make a very good argument that they have rights to manufacture to the drawings you delivered, as implied by the fact that you delivered them.

Granted, absent a contract _you_ could sell all that to some 3rd party and they'd have a very hard time claiming that they had exclusive rights

-- but that doesn't help you much.

So, basically, I think you've just learned the value of having contracts that spell out what you want the deal to be _before_ any work is done or money changes hands.

I just don't do manufacturing -- I do design, I do prototype, I test, I help my customer get spun up on manufacturing, then I walk away, whistling a tune and counting my money.

What? I read this and don't see any similarity to my situation or even how Lopez was forcing suppliers "down to their knees". BTW, you are aware that this article is 20 year old, right? This is the same stuff all the auto makers had to do in order to be profitable. Suppliers have to operate lean and profitable too.

I'm not complaining about these guys, I'm just trying to figure out how best to "manage" them. Just the opposite, I've got a very sweet deal here and don't want to blow it. So I need to figure out what is a real concern and what is paranoia... lol

things I've ever done.

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Wow. There are many issues here but in response to the one you asked about ... One way of handling it is to inform the assy house that the product you provide is custom and you only build to a (non-cancelable) purchase order and hold no inventory otherwise. You would be happy to provide any quantity they require for their inventory but cannot accommodate their request.

Another way is to work with the end customer and have them give you a PO for their forecasted demand and they hold the inventory.

Either way you have a PO and shouldn't get stuck holding finished goods inventory.

I've worked for many years in electronics, both in engineering and marketing, and had to deal with assy houses, both domestic and Maquilas, and they can be real bastards so keep your ass covered. Never forget "He who benefits, pays". Art

Multiple e-mails spanning a single breath? Goodness.

Yeah, most egregiously only a couple times (out of hundreds of customers). If they fit the pattern I've seen they're big (household) names, with many smaller suppliers vying to sell to them, and probably union shops. In both the cases I remember, they could crush many of their major suppliers like a bug if they wanted.

Sounds like your cost-benefit analysis indicates that you should decline. Perhaps you could suggest selling your product to an intermediate supplier (call them a distributor or local agent or whatever), hopefully at a domestic address, and definitely under your terms, who would then meet their terms (the added cost of that is _not_ your problem). Just state that you're not "set up" to hold inventory and whatever else that they're asking for that you're not interested in doing. If what you've been doing so far is not what you want to do in the future, adjust the price until it is worthwhile.

The worst that happens is that they go away, which btw might be the best outcome from your pov.

Best regards, Spehro Pefhany

There's a film, Mitsy's Wedding(??), wherein the star of the film (Alan Alda) is told how to 'decline' providing service to the mafia in a way that gets him out of the requirement, does not offend the mafia guy, and ends any potential obligaiont for him. Actually a good piece of writing on how to do business, without burning a bridge, nor slapping your customer.

Oh dear!

You should never give up a design without some formal agreement. You say you were paid, so they will be likely to think they have the rights to your designs?

In the UK ownership and rights of any drawings remains with the original owner and a third party can't make what is essentially a copy without an agreement. However with a few dubious changes here, and a few there, it no longer becomes a direct copy.

He became very famous for that. I knew a lot of folks in the auto biz suppliers back then who were at the suffering end of this.

True, but there comes a limit. That limit has several facets. One, you can drive a supplier out of business. Long term that is no good for either side. Another aspect is something that friends at an auto company personally witnessed. A Dollar was saved on a water pump. The guy who whipped this through the channels was declared a hero, reaped fat bonuses and all that. Shortly thereafter they became inundated with warranty claims. Failed water pumps ...

Well, when I read the 2nd and 3rd paragraph of your original post all the red flags went up in my head. Seen that stuff before ... :-)

I hope you can work out a deal with them. Sometimes the best thing in such situations is a face-to-face meeting.

I'm not sure what you are assuming here. Nothing has gone asunder.

I'm making more on the production than I did on the design and it will continue to pay with very little effort on my part. This is why I got into working independently.

That is the best idea I've heard yet! I need to find a middle man who can do all the work asked for and mark up the product appropriately. Then when they choke on the price they will continue to give me POs. :D

Any chance you mean "Betsy's Wedding" (1990)? That's what I found on IMDb. I'll check it out sounds interesting and has Joey Bishop! I haven't seen him since I was a kid I think.