Not paying suppliers is NOT a winning business strategy

04/22/2013

Consumer products giant Procter & Gamble has made the news twice lately. PlasticsToday reported on the company’s laudable “zero manufacturing waste” initiative. BRAVO! The Wall Street Journal reported (April 17, front page) on companies that “pinch payments” to suppliers. Leading off that article was Procter & Gamble, which, reporter Serena Ng noted, “is planning to add weeks to the amount of time it takes to pay its suppliers, a shift that could free up as much as $2 billion in cash . . .” BOO!

Of course this isn’t a new game to those molders and moldmakers that serve many of the biggest and best OEMs in North America. It was a trend started by GM’s purchasing head back in the early 1990s, Jose Ignacio Lopez, whose name became synonymous with bad business practices. Well, bad for the suppliers anyway. But who gives a darn about suppliers?

P&G, the WSJ article noted, wants to move its payments to suppliers from 45 days to 75 days. But of course, P&G is going to help suppliers deal with this change in terms by “working with banks that will offer to advance cash to suppliers after 15 days for a fee.” Gee, thanks so much for your kindness, P&G!...
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