Last week I received another in an endless parade of shipments from a supplier whose frequency of backorder releases I had brought under control until they changed computer systems. After taking several years to tame the beast, it was frustrating to have to start all over again, especially when the transgressions this time around are far worse than at the first.
The recent shipment of three backordered items had freight costs of 19.1% on items with a working margin of 40%. That means that if I did not dispute this invoice, I would be losing 49% of my gross profit margin if I am able to sell the three items in question. This is a supplier from whom I order every 2-3 working days, so the shipment could easily have been added to the next order created.
But keeping after your suppliers to stop the backorder nonsense benefits them as well. When you consider the human resource costs of picking, checking, packing and pickup; and then add invoicing/accounts receivable costs plus the costs of the packing materials themselves; it’s easy to see that the supplier pays as much again for the shipment as they are paying UPS or CanPar or Purolator. (Stores that commit their wholesale shipments to Canada Post are, in my opinion, taking a huge chance on when and how they will arrive.)
Ministry is ministry, but business is business. Don’t be afraid to speak up. The effective gross profit margin you are able to preserve may contribute to the longevity of your store. Ignoring it may contribute to its downfall, and in some small measure, possibly the downfall of the supplier concerned.





I’ve been a frequent reader of Mark’s Batterson’s blog, 
