Price Gouging? (Electronic components)

blackholequasar

The Cheerful Diabetic
#1
Hey all!

So recently I had a supplier who shorted us 20 electronic components in the purchase order. When I requested that they fill the 20 part shortage, as we are line down, this was their response: We have no more in stock at $0.05 ea, I can get 64 pcs min at $0.252 about 7 days to me. Please send a new PO and I will push it through

Naturally I responded that it was unacceptable that I pay extra for parts I already ordered, that are late without any notification, with an additional 7 day delay. They refused to offer any other solution than paying the higher price and longer lead time. Is this an example of the price gouging I've heard about regarding electronic components?? I'm so baffled, I have not encountered something like this before! Poor customer service, for sure. (Thankfully DigiKey has the parts I need in stock)
 
Elsmar Forum Sponsor
#2
If they are a distributor, it's not unusual to make a commitment to fill a customer PO only to discover that parts must be ordered in to make up the full quantity and those might be supplied at a higher price (to the distributor). I see no real issue other than a commercial one based on their practices and your tolerance of them. I'm pretty certain the small-print covers them for market-driven price hikes they cannot control and may not have much notification of. Of course, if you don't represent much sales revenue to them, they aren't going out of their way to help you avoid this, either, by strategic sourcing. But then, I could be wrong.
 

blackholequasar

The Cheerful Diabetic
#3
You kind of hit that nail on the head - we are a small PCB manufacturer. We're certainly not some of the larger customers I'm sure they deal with. It's just a frustrating feeling when you have submit a budget to a customer and need to vary it due to supplier pricing changes - BUT! I digress, that's not really something that's out of the ordinary either! It just seems to be much more prevalent.

As we've discussed in another section... these shortages are painful. I've never seen them so bad. I just feel that it's better business to adhere to your purchase order promise than to change the price when you (as the supplier) has been negligent.

We're a small fish in a big ocean where everyone is starving for components :(
 

Mike S.

Happy to be Alive
Trusted Information Resource
#5
Pendulums, even metaphorical ones, almost always swing back. Sometimes slowly, but they usually swing back. Right now many suppliers act like their customers should be honored that they give them anything at all, let alone give them quality parts and good customer service. Remember them, remember the ones who treat you well and those who don't, and act accordingly whenever and wherever you can.

It's like I told the guy seal-coating my driveway, "If you do a great job, I'll tell everyone I know, if you do a poor job, I'll tell everyone I know."
 
#6
Hey all!

So recently I had a supplier who shorted us 20 electronic components in the purchase order. When I requested that they fill the 20 part shortage, as we are line down, this was their response: We have no more in stock at $0.05 ea, I can get 64 pcs min at $0.252 about 7 days to me. Please send a new PO and I will push it through

Naturally I responded that it was unacceptable that I pay extra for parts I already ordered, that are late without any notification, with an additional 7 day delay. They refused to offer any other solution than paying the higher price and longer lead time. Is this an example of the price gouging I've heard about regarding electronic components?? I'm so baffled, I have not encountered something like this before! Poor customer service, for sure. (Thankfully DigiKey has the parts I need in stock)
Did you sign a contract with them?
 

Tagin

Trusted Information Resource
#7
The way it is now with global shortages of electronics components, we are finding lead times up to 52wks being quoted, and the middlemen in the supply chain often don't have much certainty about shipping dates and qtys they will receive. Prices have certainly shot up. It may be they were trying to fill your need via parts brokers who price by supply & demand.
 

blackholequasar

The Cheerful Diabetic
#8
Did you sign a contract with them?
We had a purchase agreement in place with them. The issue was they didn't tell us they were shorting us the 20 parts. But what @Tagin said rings very true - first he said he had them available, then he said it was over twice the cost at a 7 day lead time (which is the best I've heard all week to be honest!!) Most likely working with brokers to get the parts where they need to go. We had to buy three times the amount to match the $10 minimum, which I felt was unfair since we weren't even informed of the shortage to begin with. How it goes these days, I guess!

Imagine working at McDonalds and you're out of hamburgers. That's kind of what this must feel like, right? You can have chicken nuggets (non-RoHS parts) even though you wanted a burger (RoHS) to fill the difference in supply, sure! But they can't really just make burgers appear. They're waiting on a truck who's waiting on a manufacturer who's waiting on a processor who's waiting on a farm. It's rough, all around, for everyone.

PS Starbucks discontinued my favorite sugar-free cinnamon flavor because of supply chain issues (they felt it better to cut losses than try to wait for supply to replenish) so it can't get any worse now, right? Haha
 
#9
first he said he had them available, then he said it was over twice the cost at a 7 day lead time (which is the best I've heard all week to be honest!!)
I'm guessing this distributor is ISO 9001 or even AS9120 certified, in which case they are violating their process in accordance with 8.2. I'd lodge a complaint with their Certification Body.
 

Ninja

Looking for Reality
Staff member
Moderator
#10
I'm guessing this distributor is ISO 9001 or even AS9120 certified, in which case they are violating their process in accordance with 8.2.
Really? How so?
I just re-read through 8.2 in entirety, and I don't see how the distributors actions are in violation (unless I make other significant assumptions which may not be the case).
I can easily see a scenario where 8.2 (in fact all of the ISO requirements) are met and the above situation would occur.
 
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