Paul Ericksen of Industry Week has been writing about supply chain issues for many years.  His most recent article “Supplier Goodwill toward OEMs Has Run Dry” caught my attention.  The title is clearly meant to be provocative even though Paul says in his article that he is not “anti-OEM.”  The article itself identifies several key business realities for suppliers, including ways that they can manage their OEM relationships.

As Paul accurately points out, for most suppliers the OEM relationship is based on leverage.  If you sell a commodity you have less leverage than if you are a sole source.  Further, Paul suggests that suppliers diversify their OEM relationships – certainly accurate – although not as easy to accomplish.

Paul suggests that suppliers impose 30 day payment terms, which clearly recognizes how critical having cash on hand is for manufacturers.  Paul also points out something we have been talking to our clients about for years, namely, how to keep some of the revenue that comes from cost reductions.  Too many suppliers sign contracts without recognizing that they can negotiate that issue.

Overall, Paul’s article is a good read for both suppliers and OEMs.

Photo of Jeffrey White Jeffrey White

I am a partner at Robinson+Cole who handles corporate compliance and litigation matters for both domestic and international manufacturers and distributors that make and ship products around the world. My clients have ranged from publicly traded Fortune 500 companies to privately held and/or…

I am a partner at Robinson+Cole who handles corporate compliance and litigation matters for both domestic and international manufacturers and distributors that make and ship products around the world. My clients have ranged from publicly traded Fortune 500 companies to privately held and/or family owned manufacturers. For those looking for my detailed law firm bio, click here.

I am often asked why I have focused a large part of my law practice on counseling manufacturers and distributors. As with most things in life, the answer to that question is tied back to experiences I had well before I became a lawyer. My grandfather spent over 30 years working at a steel mill (Detroit Steel Company), including several years in its maintenance department. One of my grandfather’s prime job duties was to make sure that the equipment being used was safe. In his later years, he would apply those lessons learned in every project we did together as he passed on to me his great respect and pride for the manufacturing industry.

Because of these experiences, I not only feel comfortable advising executives in a boardroom, but also can easily transition to the factory floor. My experience has involved a range of industries, including aerospace and defense, chemicals, energy, pharmaceuticals and life sciences, nutritional and dietary supplements, and retail and consumer products. While I have extensive experience in litigation (including product liability and class actions), I am extremely proactive about trying to keep my clients out of the courtroom if at all possible. Specifically, I have counseled manufacturers and distributors on issues such as product labeling and warranties, product recalls, workplace safety/OSHA, anti-trust, and vendor relations, among other things. I always look for the business-friendly solution to a problem that may face a manufacturer or distributor and I hope this blog will help advance those efforts.