I can see it from both sides. When I read the first post my initial thoughts were those of treyman's. I could definitely see the practice being abused and leading to poor customer service, lower sales, loss of inventory, etc. But I can also see positive benefits for allowing it if it's properly managed.
As for the Tandy reputation, I think Tandy serves a purpose, even today in its ultra-profit-driven corporate-mindedness, because the reality is that for most people it's the only retailer around where they can go touch and see leather and tools. I think Tandy could do a lot better in its service to the common leather worker, but its main customer is the new I-don't-know-what-I'm-doing-and-don't-want-to-spend-a-lot-on-a-new-hobby consumer. I often run to Tandy because I need immediate gratification and can't wait for an order from Springfield to arrive for that one thing I'm missing. The Tandy workers I've encountered are always nice and friendly at least. I'm also still learning, and for the most part, most of the Tandy employees know more than I do (for now), so if I have a question at the store, it's usually easily answered. I've even had Tandy employees open new product to show me how to do things without asking if I was going to buy it first. I agree that the classes Tandy offers are pretty worthless because the people teaching them aren't usually skilled craftsmen nor are they trained trainers, but at least you get the tools at a discount. No, they're not top-of-the-line tools, but everyone should be able to agree that they're serviceable.
To me, Tandy is for the new hobbyist and not the craftsmen who make they're living working leather. They're like JoAnne's Fabric and Hobby Lobby for the sewing and craft communities. If you're using Tandy to supply your business I'd question your business practices, because that's not their main focus. Even as a wholesaler, they're main purpose is providing products for resale, not for actual use in the leather trade.