Who pays for certification to the PED (Pressure Equipment Directive)?

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tammydiz

Good afternoon my fellow covers! My situation is this - Our end customer is requiring that we become ceritified to the PED (Pressure Equipment Directive - a European requirement).

Our product passes through an external process which is located on site, but which we do not own, then comes back into our process for further processing. This external process must also meet the requirements of PED. :mg:

When we approached our external suppleir regarding the PED requirements and becoming certified their reply was that they would be happy to do this as long as we paid all costs asscociated with the audit and continued maintenance. Now, please understand that this in the end will benefit them as well (it is marketable and desireable to their other customers). :2cents:

I have not heard of a supplier asking their customer to pay for certification costs. Is this common? Is it because it is a "specialty" certification? Should we accept this type of behavior from our supplier? Am I just out of the loop on this?? :confused:

Any feedback or information would be greatly appreciated! :thanx:
 

Ronen E

Problem Solver
Moderator
IMO, it is a reasonable response. You want it, you pay for it. All the rest is irrelevant. If you are so unhappy with the response, you could always look for a substitute. I guess your supplier is aware of that and have taken it into account in their considerations...

BTW, you could do the same with your customer - roll over the certification cost to them. IMO there is no substantial difference between the 2 relationships (a) you and your customer (b) your supplier and you.

Cheers,
Ronen.
 
T

tammydiz

I guess I look at it from a customer satisfaction standpoint. We strive to keep oour customers happy, so we oblige their request fro PED certification, in the end it means more business for us and continued business with a long term customer. If we don't achieve the PED then we would potentially lose several customers.

As for our supplier, I suppose they look at it from the perspective that we don't have a choice but to do business with them without exorbitant costs to us. Essentially, they are the only choice supplier for our business, so they feel they can make us pay for whatever...
 
M

Michael T

Hi Tammy...

Still having fun with the PED, I see... ;)

There have been several instances where we have asked the customer to pay for certifications they require. Typically, these are unique to that one customer, but sometimes not (for example a specific UL listing or a Canadian Registration Number on a specific product).

While the original request for the PED was from one particular customer, we made that business decision to pay for the PED ourselves knowing that we would be selling to many other customers as well.

Hope this helps...

Regards,

Michael
 
T

tammydiz

Michael T - Thanks for your reply. I can see where it makes since to ask for a customer to pay for the certification if they would be the only ones requiring and benefiting from it.

Perhaps it just irked me. I felt it quite audacious of them. In the end they could benefit from this and most likely would. However, if we end up paying for this certification I believe that there would be certain stipulations placed on the contract we define for them.

Personally, I think it is just better business practice to work with a customer than to play on the situation - you may not come out on top.
 

Ronen E

Problem Solver
Moderator
It always comes down to the supply-and-demand situation; though some companies are wise enough to understand that "supply and demand" is a dynamic thing and today's decision might come back to bite them tomorrow. Unfortunately, some still don't.
 
T

tammydiz

Ronen E - Thanks for your reply. I wholeheartedly agree. I'm sure they will realize their error once we present them with such a dynamic contract!
 
T

True Position

If you're adding new requirements to a contract, how can you consider it offensive to be asked to pay those costs? (or at least a portion of them) The amount of money, the sizes of the organizations, how profitable the work is, etc would all come into how hard do you fight.

I've personally seen tooling pulled in a fight like this, be careful.
 
T

tammydiz

I see it differently. New requirements are imposed on suppliers all the time. This was a new requirement that was imposed on us as well, which we then had to pass down to our suppliers. It happens and most companies know this, expect it, and deal with it as best they can. Now don't get me wrong - I understand that at this particular moment in time we may be the only customer asking this of our supplier. We don't mind some negotiations on the payment, but to be so blatant about it was a little condesending. As I stated before, they have the potential to gain from this as well. If we end up paying for it (which it seems that we will), we will make it particualr to our product only, then there will be no potential for them to benefit. Which is poor business practice on their end. Why not split the cost and benefit in the end with other customers??? I'm just sayin'!
 
T

True Position

I see it differently. New requirements are imposed on suppliers all the time. This was a new requirement that was imposed on us as well, which we then had to pass down to our suppliers. It happens and most companies know this, expect it, and deal with it as best they can. Now don't get me wrong - I understand that at this particular moment in time we may be the only customer asking this of our supplier. We don't mind some negotiations on the payment, but to be so blatant about it was a little condesending. As I stated before, they have the potential to gain from this as well. If we end up paying for it (which it seems that we will), we will make it particualr to our product only, then there will be no potential for them to benefit. Which is poor business practice on their end. Why not split the cost and benefit in the end with other customers??? I'm just sayin'!

You could try and push these costs to your customer as well.
 
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