Meeting with Jeff (SVP Ops) and Mike (CEO/CFO)

Supply chain is a ‘shake down’.

Everyone is creating a jam and creating opportunities to extract fines, fees and revenue (or get discounts). And all parties are involved in pointing fingers and blame game.

To solve this,

• teams want data as evidence against a shake-down. E.g evidence of Time of arrival/departure to/from port, to fight detention and demurrage fees.
• Contract negotiation is a key skill. CEOs get all contingencies down on paper.

Large players (apple, walmart, target etc) are the crooks. They are the worst players to work with.

Since these players have power, they can command the relationship.

E.g Walmart impose delivery deadlines, after which they can cancel shipments. This screws over the LogisticsServicePorvider (LSP) who has spent money on moving goods. Now Walmart has leverage to ask for 50% price reduction otherwise they won’t take in the goods. LSP has no choice.

Customers will pay when they want to, regardless of contract terms. Large players abuse this. SMB companies usually pay on time.

Even if terms are Net30 Net45, customers almost always pay late (past their due dates). Items bought on credit are essentially a free loan for the buyer. This behavior (they believe) won’t change with software.

The free loan is used to pay for higher ROI projects (M&A, improve cashflow etc)

<aside> 💡 The opportunity of guaranteeing the invoice for a fee (i.e. “factoring the invoice”) was a proposition they liked. Factoring exists and is very expensive (20-30% APR).

</aside>

Dependable has good cash-flow so its not an issue for them. Their cash is a low interest loan on the value of their downtown LA warehouse ($100m+ asset).

Supply chain teams don’t look at problems ‘until line is into the kitchen’ [until its dire].