Fighting Surcharges — It's About Time

Over on MetalMiner, there's a good story about how Johnson Controls is going after steel surcharges at its suppliers. According to MetalMiner, "Johnson Controls ... sued four suppliers for levying steel surcharges on them, alleging the suppliers had violated their purchasing contract. The story is rather shocking not because automotive suppliers have been squeezed considerably since the start of the year due to rising steel prices, or because they actually decided to execute a clause in their purchase contracts (good for them). No, the story is shocking because it's Johnson Controls. For those of you who don't know the Holland Michigan based supplier, they are known within automotive circles as a leading spend management, supplier relationship management, sourcing best practices firm." Personally, I think it's about time that companies begin to fight back against producers when it comes to commodity price inflation. In an environment where demand has fallen off and pricing seems artificially inflated at the present time, procurement organizations should employ every option in their arsenal -- including the legal one -- to fight unjustified price increases.

- Jason Busch

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