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It's that time of the season when everyone is costing, everyone will be anxiously looking through detailed costings, or rather some will and some will be responding to prices given to them by shoe factories or tanners and hoping for the best!
Interested parties will pore over these figures looking for every possible cent to either save or make extra margin depending on their perspective.
It has interested me for a long time as to why the issue of the "claim culture" in this industry is not addressed. It is a topic that is very rarely discussed and when it is, it's not in any detail and apart from the fact that it goes on. I actually don't know the detailed mechanics of how it operates.
The basic premise is straight forward, shoe factories claim for cutting losses against agreed cutting coefficients, which is fine if there are losses but as I am led to believe that these claims are made regardless of the actual cut coefficients, so shoe factories claim, tanners pay and cost into the final leather price and brands then pay in the shoe costing as the leather price is inflated.
I am also told that some shoe factories actually have a person who's job it is to ensure claims are made against every delivery, this has led in my experience to claims being made against delayed orders that hadn't actually arrived in the factory let alone been cut! Also I heard of a a shoe factory getting the agreed coefficient incorrect and actually trying to claim when the cut coefficient was higher than the costed coefficient!.. I assume the shoe factory did not compensate the tannery for the better quality leather than they had expected.
As I have said in previous blogs I am all for open costings and when I have queried this claim culture often the reply would be "well if they didn't claim here they would claim somewhere else, at least we understand this situation." I find this a disappointing response and one that needs to be addressed but it requires input from all parties the shoe factories, the tanners and the brands and it needs good technical understanding of the leather, the cutting of the material and what can be specified into a shoe. I guess here lies the problem, however I do think it is an issue that should be openly discussed and not 'hidden under the carpet’. Do the shoe factories actually need this extra margin or is this extra cost that could be saved?
Director, Seaward Material Solutions
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