Quote:
Originally Posted by Minte
Have you bought a loaf of bread lately?
From my vantage point,these historic increases in materiel costs is a short term setback. We are forced to raise our prices. In 45-60 days our receivables will begin to turn those price increases. However, the longer view for the consumer isn't as easy to solve.
Just a few days ago our purchasing manager handed me a memo he received from a supplier in Ningbo,China and they are announcing a 30% price hike in the items we purchase. We have been importing items from China for nearly a decade. This is the first time there has been a double-digit increase on a 6 month blanket order.
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Of course, but we also make our own bread... so I know what the raw materials cost.
How much have your raw material costs gone up over the last decade? Outside this year...
We don't have a decade of stats, excluding this year our raw costs have gone up about 25%, with this year it's a pretty big ass jump.
I see what China is doing, while it may cost us both more today, it should in the long term create a longer stable price, allowing us to forecast our future costs with much better accuracy. Something China has been bitching about with the various markets for awhile now, and kinda a smart business move if it ends up happening.
Go in with a couple other companies next time and buy in even larger bulk... the price will go down. That's what they want, less small orders, more larger orders, and we distro here ourselves, lowering the projected costs for them.