Understanding the Supply Chain

Musings from Dennis #5: It is always good to meet partners like retailers and licensees knowing something about the supply chain – how the goods travel from factory to port to store to shelf and how the pricing structure get stacked from FOB to the final retail price you see on the tag. Early days in licensing I got bluffed a lot. A Singapore buyer once insisted we reduce our royalties so that they can get a better margin from one of our licensees. This licensee cleverly shifted the ‘blame’ onto us while wanting to keep his wholesale price. Of course I was wounded after that attack (buyer was shouting, how rude) and only found out later that our royalty component was tiny compared to both of their margins! These days if I get challenged again, I will ask for both of us to bring out our calculators! Not that same stupid man anymore.