So what do you think about the revelations about Premier Foods asking it's supply chain to make an "annual investment" payment to remain on their suppliers list, or "pay to stay"
Apparently Premier Foods, the UK's largest food manufacturer is struggling, so to generate revenue it has hit on the idea of asking everyone in it's supply chain to contribute and in return they will remain a supplier.
This has obviously stirred up a lot of passion and emotion across the news networks, but analysing it coldly from a business perspective, are they doing anything wrong?
A lot of suppliers are reliant on Premier Foods who will be one of their major customers. If Premier Foods are in financial difficulty, then if they don't raise the relevant capital, then they may have to look at other options, maybe selling off products or parts of the business, which could then seriously impact the supply chain, maybe crippling numerous suppliers.
Any supplier can stick up 2 fingers and sell their products elsewhere, after it is a supposed free market economy.
Ethically and morally it stinks, but business can be brutal and everyone knows you should never be reliant on a single revenue stream, when that stops, so does your business.
If Google (don't get any ideas Google) said we need to bill you £xyz annually to utilise our analytics, PPC, adsense and be indexed, I'd moan and bitch, but would pay it.
Or do you think this kind of behaviour should be regulated and a government agency or legislation should intervene? In which case is that the end of a free market economy?
In an ideal world, the suppliers would band together, say no and then increase their prices by 10% and find new customers