Loading ...Let me tell you a little story about Underbidding …I was a Franchisee in a Coffee & Donut business and also a BUYER of COFFEE on a Buying committee .One day we got a bid for Roasting coffee (contract manufacturing) for all Franchise & Company stores from Virginia to Louisianna .It was for millions of LBS of coffee per Month ,at out our meeting we awarded the contract to xyz corp in NJ for Roasting .They in turn normally would have signed Futures contracts for Future delivery to cover and Lock in the price and their Profit ..(Guaranteed Profit)However they the Roaster thought they knew more than the Buyers (Me and the Commette) and decided to wait because they thought the price would go lower and they could keep the difference .We were committed at the agreed upon price to buy.They were committed to sell at the agreed upon price ,so in effect they sold “short” .Well they were wrong and the price went up and not down and now they were in the position to deliver at a price below what they pre sold to us at.So what did they do ..They bought a cheaper grade of Coffee from mexico ,roasted and delivered it to thousands of our stores ..Then the shit hit the FAN ..everybody including our retail customers knew something was wrong…”This is not our COFFEE” ,,so I sent samples to the TESTING LAB and they concurred it was not the agreed upon coffee contracted on. So we threaten ed the ROASTER “You will take back every lb of coffee in the stores and buy at whatever price it takes to deliver per contract specs. and compensate us for business losses we took from the sales of under speck coffee. ,or you will be BARRED forever from doing business with us again . We were among the biggest buyers in the Country !They did buy it all back and had to buy in the Market place enough to cover the contract at a loss to them of Millions of Dollars. So thats what can happen when you under price your bid or substitute a lower grade that what was agreed upon. The Market place has a way of dealing with crooks ,business people are not Stupid..You will pay a Price./.We wanted them to make a profit and built it into the agreed upon price .But they got Greedy ..and took a Bath..
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