A couple of weeks ago, I was contacted by a large organisation: They wanted about 2 million dollars worth of inventory - and they wanted it this week. This is a significant sum for me, more than we’ve sold last year. This contract would have also opened the door for similar future contracts.
My total inventory at the moment is worth less than 100K, so there wasn’t much to do, and I lost the contract. It’s not a terrible story - the organisation that contacted me also have more “routine” needs and we’re discussing me supplying them on a regular basis, but numbers are smaller than this kind of large, urgent purchases, and the approval process is longer since this order was an emergency procedure.
This is the 2nd time that a similar event happens to me (different client than last time). It’s likely this could happen again - maybe even in a couple of months - but it could also be years.
Besides for saying “welp, i’ll keep that in mind for when my business is larger”, do you think there’s anything I could do so the next time such an oppurunity falls into my lap I’ll be able to catch it?
If time wasn’t an issue I would have been able to finance and produce to order, but in both previous cases, the clients wanted in-stock inventory.
Am I just doomed to wait until we grow 20X to be able to answer such a call?
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“Sorry that the last large order didn’t work out. I typically don’t carry that large of quantities because my suppliers are pretty quick. Can we talk through what triggers those orders and see how we can work together to get me in the loop sooner so you guys don’t end up in a bind?”
Trade financing
I don’t know what the product is so I guess it’d be down to how many units you are able to produce in such a short notice. Would you be able to produce $2M worth of product in one week if you had the money/they paid a rush fee?
Why are they not contacting you more weeks in advance?
If I max my current capacity, it’d take me several months.
They contacted me to respond to an urgent need that came up - a few weeks ago the problem that they needed to solve wasn’t there. I’m trying to make the case that they should stock up on my product now for the next time…
Your going to go out of business assuming you could even fund the 20x order and they don’t pay on time…which they usually never do.
They’re an A-level client, it won’t be hard for me to finance the PO.
It sounds like it could be a fantastic customer for you if you can work with them to improve forecasting and establish mutually acceptable lead times. One question that comes to mind is do they actually need all of that inventory all at once, or could they take a portion of it immediately with weekly shipments thereafter until the rest is fulfilled? I don’t think you’re doomed, but you have some relationship building to do with this potential customer so that you can create a business arrangement that lets you ramp up and know that you’ll continue to see a certain level of demand from them, especially if ramping up requires a significant investment in production capacity. Beware though, it is risky to have a single customer that brings enough business such that it gives them an unreasonable level of influence over your business. Not risky enough to not pursue the business, but something to think about and make sure is represented in your business risk management planning.
I think you’re very right about building a relationship with them, and even their routine needs can be amazing for my business. The annoying part is that they will never be able to predict these kind of orders - it’s dependent on events outside of their control, and when they do they’re quite urgent - they wanted the whole order at once in one week… I’m trying to sell the idea that they should stockpile on my products in advance (which makes sense in my eyes) but I’m not sure that’ll catch.
And overdependence could be an issue here, especially since they seem a bit fickle and work on a project-base, so I could easily just be cut off one day. Definitely requires risk management.
Try outscoring some of your workload to a smaller competitor/s so you can make the profit to expand.
Do keep as much of the contract details secret as you don’t want them to expand and take the contract off you.