test

Late shipments can mean the downfall of your business. Whether you’re ordering from a new vendor, sourcing a new product, or having troubles with a current supplier, you want to avoid shipment delays at all costs.

A delay by even a few days could mean unhappy and unsatisfied customers, lowered revenue, bad ratings, poor customer service, mismanagement of inventory, and negative supply chain relationships. In fact, even one late shipment can drastically influence your reputation on Amazon. Not being able to meet customer demands and orders can be detrimental when Amazon competition is so fierce.

So how can you prevent late shipments?

 

Why Are They Late?

In order to prevent delays, you need to first understand why the vendor is running behind with your order. There are 7 common reasons for postponed or late order shipments.

 

1. The supplier is waiting for similar orders.

You are likely a small business making a small to medium sized order. In order for suppliers to make money on their production runs, they prefer to create high volumes of a product at the same time. (This is the reason for minimum order quantities.)

Even with an MOQ, your vendor may be delaying the production of your order because they are waiting for similar orders to come in from other companies. If your product shares an element or piece with another comparable product, your vendor can run their equipment once with a larger volume. This saves them money and boosts their margins.

If this is the case for your vendor, you might want to work with them to discuss a proper MOQ or timetable moving forward.

 

2. The supplier is running low on production capacity.

Factories have a limited production capacity; they can only produce so much in a given day. Most vendors are large and serve multiple companies at one time. If they deal with bigger companies or corporations, they will likely focus their attention on these larger orders before they get to your small order.

You are not a priority to that vendor, which can cause indefinite delays and poor communication. In this case, you may want to consider switching suppliers or better managing your relationship with your current partner.

 

3. There is no penalty clause in your vendor contract.

Penalty clauses outline the penalties if the vendor does not meet the requirements of the contract. This includes shipment, delivery, production quality, meeting regulations, and more. If you don’t have a delivery penalty clause in your contract, your vendor will likely have no consequences if they have a late shipment.

If a vendor refuses to agree to a penalty contract, you should reconsider doing business with them. This means they likely know that they won’t be able to get your order in on time, which can cause future delays and issues.

 

4. The vendor is a trading company with little control of the process.

Trading companies work as middlemen between client (or client representative) and factory. They can help manage your production and supply chain. However, if you’re working with a trading company, they likely don’t have control over the speed or shipment of product. This means that they cannot regulate delivery times, and you have no way to influence the direct source of the shipment delay.

 

5. The goods are stuck in customs.

Shipping in from overseas means the goods must go through customs. Some packages get stuck in customs due to incorrect HS codes, IPR infringements, incomplete or incorrect shipping documents, and even a question of contraband.

To avoid this problem, you want to have thorough data consolidation and online tracking of your packages. This will help you find your order location in real time so you can act appropriately.

 

6. The vendor is going through a factory audit or other production delay.

Factory audits, holidays, equipment malfunctions, and even strikes can slow down order production and shipment.

 

7. There are sourcing delays.

Sometimes, you producer may not have been able to get the physical materials from their sourcing partners. This can create a backup of production. This is especially common for new orders, where factories have to source new sorts of materials.

 

How Can You Manage These Risks?

Prevent late shipments by being proactive rather than reactive. Below are the 8 simplest ways to ensure your orders are filled, produced, and transported in an appropriate timetable.

 

1. Prequalify your suppliers.

Choose a credible supplier with a proven track record. Ensure that they will be able to produce at the capacity you need with an appropriate MOQ. Gather testimonials and reviews to determine their reliability and shipment processes. Don’t partner with a vendor that doesn’t have a strong track record.

But even credible suppliers can have late shipments, so prequalification isn’t enough to manage delay risks.

 

2. Communicate and build relationships.

Relationship management is crucial along the supply chain. If you make yourself a trusted and valuable partner to your vendor, they will, in turn, offer value to you. If you have a strong relationship with your supplier, they are more likely to prioritize your orders over your competition. Create these relationships by offering win-win solutions for all parties.

Deliver value to your supplier so they will deliver value to you and your customer.

A key part of relationship management is communication. For example, if your vendor tells you they are going to have a late delivery, don’t get angry with them. This can create a poor relationship moving forward, which will continue to spiral into additional problems. Instead, try to understand the delay. Realize that things happen and offer to work with them to get the order delivered as quickly as possible. (If deliveries are consistently late, though, it’s time to start looking for a new vendor. Don’t be too understanding.)

Bonus Tip: If you’re going to have a late delivery, ask for a partial delivery in the meantime. This will help you keep up with demand in the short-term.

 

3. Include a delay penalty clause.

As discussed in number three above, delay penalty clauses are crucial to preventing late shipments. A penalty clause deters suppliers from delaying your orders. It also strictly lays out the percent at which the vendor will be charged for every day that the shipment is late. Additionally, it spells out the period at which the contract becomes void due to a late shipment.

If late shipments negatively impact your business, a penalty clause allows you to liquidate your damages. This means that you can gain back from (or sue) the vendor in a number of lost sales, diminished reputation, and other issues that came from the delayed shipment. Keep in mind that doing so would likely damage your relationship with that vendor. Nevertheless, a penalty clause will better protect your business from unreliable or flighty suppliers.

 

4. Implement tracking processes.

A strong, real-time data system will help you understand where in the world your goods are located. This can help you better determine the timetable of delivery as well as where along the supply chain your shipment got delayed.

 

5. Set hard deadlines.

Negotiate your timeline with your vendor and set a specific date by which you will have the shipment. Never accept “we will have it to you soon” as an answer. Try to set the deadline at least one week before you will actually need the inventory on hand for launch or sales.

 

6. Order early.

Despite deadlines, things still happen. Proactively expect these delays by ordering with a buffer window of time.

Give your vendor a realistic lead-time. Use their general timeline as a jumping off point. Say that your vendor typically has a fill and shipping period of 90 days. Order 100 days in advance so you have a 10-day window for any potential delays.

 

7. Know the Chinese cultural calendar.

Don’t forget that you’re dealing across borders and across cultures. While you may be working, the factories in China may be shut down for a national holiday like Chinese New Year. These cultural differences can influence and impact your production.

Put a Chinese calendar next to your current calendar. Plan orders according to both schedules.

8. Work with a sourcing partner.

There is a lot that goes into preventing and fixing delayed shipments. If you want to focus your energy on sales and core business strategies, work with a sourcing partner like Ask Idea Sourcing. We will:

• find you a credible, reliable supplier with a proven track record.
• help you build and manage cross-cultural relationships by providing on-the-ground support in both China and the U.S.
• draw up and negotiate your contract for you, including penalty clauses and letters of credit.
• use innovative technology and order monitoring processes to deliver your product door-to-door safely and efficiently.
• set deadlines and negotiate order timetables by running your logistics for you.

 

A sourcing partner can deal directly with your supplier on-the-ground. This ensures that communication is at the heart of every order. If something goes wrong or a shipment is delayed, your partner is right there, in the trenches, ready to handle it for you.

Contact us today to learn more about how our services work to ensure on-time deliveries.

 

LIKE us on Facebook!

jQuery("#mc4wp_form_widget-3 .submit_buttons").text("Get the e-book");
%d bloggers like this: