Suppliers to industrial manufacturers or large trading groups

The supplier industry has been the backbone of the national economy in Germany for decades.

Supplier companies are upstream suppliers to industrial manufacturers or suppliers to large trading groups, with whom they enter into long-term contractual relationships, supplier contracts.

From SMEs to medium-sized corporations, supplier companies shape many sectors such as automotive, mechanical engineering, electronics, furniture and furnishings, food and retail. Suppliers, often family businesses or hidden champions, stand for innovation, social responsibility and regional identification.

While industrial manufacturers or large retail groups are making record profits despite general challenges such as the Corona pandemic or the consequences of the Ukraine war and sector-specific difficulties such as the diesel scandal, SMEs are increasingly struggling to survive.

A major cause is the unequal balance of power between suppliers and industrial manufacturers as their customers. In many production areas, manufacturers are now concentrating on constructive planning tasks and on the assembly of prefabricated individual parts for their end products in order to reduce the vertical range of manufacture, and are shifting research and development, actual production and quality assurance to suppliers as an extended workbench (outsourcing). It is not uncommon for suppliers to have to deliver pre-products manufactured according to the manufacturer’s specifications, usually just-in-time or just-in-sequence, and to comply with other requirements, including costing. The situation between suppliers and large retail groups is comparable.

If industrial manufacturers or large trading groups shift their sales risks to their suppliers, this leads to a crisis or insolvency for the supplier who is usually the loser. Because legislation and case law do not yet provide balanced solutions, suppliers are coming under increasing pressure in practice.

Typical situations are:

• Your customer purchases less than calculated (shortfall in quantities) and it becomes impossible to amortise the expenses via the parts prices.
• Your customer has terminated the contractual relationship prematurely, although your investments have not yet been amortised (premature termination of contract).
• The originally calculated prices no longer cover the investment costs and/or the operating costs, but your contract partner is not willing to negotiate the contract.
• Your company can only manufacture for your only or most important customer and you cannot enforce necessary price adjustments or price increases.

MÜNCH. has many years of experience in supporting medium-sized companies in negotiating supplier contracts with their often dominant customers.

MÜNCH. is committed to balanced and fair contractual relationships between contracting parties of different strengths and can draw on extensive litigation experience.

MÜNCH. implements price adjustments and price increases not only in court, but above all by mutual agreement, because only this is sustainable in the long term.

MÜNCH. restructures companies when they have already fallen into crisis due to underfunding or are about to do so.
In 2024, MÜNCH. brings together experts from the fields of law and economics, business and legal practice for the third time as part of the “Supplier Law Round Table” event to promote the reform of supplier law.