Want to prevent late deliveries? Ask your manufacturer for these three things.
One issue I constantly see plaguing product companies we work with is late deliveries. You have clients waiting for your products, you placed your manufacturer order a month ago, and now with a week until the delivery date you learn from the factory that your production run will be delayed for weeks.
Production delays happen
At some point every product business encounters this issue. Even giants like Apple and Tesla have had to deal with this.
https://www.supplychaindive.com/news/Apple-supply-disruption-cost-iPhone-8/447082/
Some manufacturer delays you can’t prevent
Now, not every production delay is avoidable. A couple of years ago I remember a heat wave swept through China and factories were forced to close as temperatures reached dangerous levels. That’s not the kind of production delay we’re addressing in this article. This article addresses the production delay where the manufacturer says “Oh no, something went wrong on the factory floor. Whose production run can I afford to delay…?”.
That does happen. Whether it’s a shiny new client coming through the door and bumping existing orders or another issue causing a cascading delay through the production line, you don’t want your order to be one the factory decides to kick down the road. Here are three things you should know before paying a deposit, and you should have them in writing.
Arm yourself with these supplier delivery practices
- Establish late delivery terms – When Target or any major retailer places an order with you, they will have a delivery date and very punitive terms on late deliveries. This can range from a 3% discount per day, all the way to the right to cancel the entire order and get any money back they have paid you. If you know ahead your delivery is going to be late, they will often relax these terms because they still want your product, even if it’s a week late (get that in writing too). That being said, they keep the terms in their orders so they have leverage over you. Plus, in the future if they mess up on something they can leverage that good will with you: “Hey remember when I didn’t charge you those late fees? Now you be nice to us.” You should do the exact same thing with the factory. Get them to agree to onerous late delivery penalties and then if your production is delayed, you can leverage those terms to your advantage. I have personally often had the factory pay air freight for a portion of the shipment to make up time for a production delay. If they expedite shipping so that I receive the order at the originally agreed time, I don’t really care if there were delays during production. You can also leverage that good will in future events if you ever happen to screw up. Everyone is basically playing the same game.
- Quantity manufacturing discounts – This is a softer play but frames your company as a priority client. If you can stress how much quantity you have manufactured in the past, that is great, but get your manufacturer dreaming about how much business they’re going to do with you in the near future. If they think you’re a VIP, they will treat you like a VIP, and that means no delayed shipments. Asking them, “Can you please send me the quantity discounts for 10x this order size” subtly frames your business as one that you expect to grow rapidly. Plus it’s good information to have anyway.
- Inspection date – Get a third party quality control firm to manage your post-production quality control process. Ask the factory for an inspection date and make it clear to them you’re booking this third party firm to arrive on that day for the inspection. Stress the importance of not having to rebook the date because of booking travel tickets or whatever other plausible reason. If they try to delay your production, bring up the e-mail thread and make a big fuss about how you checked and triple checked and can’t rebook so you need to keep the same inspection date. Chances are, if you make it annoying (or expensive) enough for them to reschedule your production, they’ll just get it done instead.
View your manufacturer as a supplier
There are always ways to continue to improve, but these tips have helped get factories to perform on time and, when they don’t, make up for it however they can. If you’re getting terms from a retailer, ask yourself if they can be applied to your manufacturer. Just as you’re a supplier to a major retailer, your factory is a supplier to you and many of the terms can be adapted or adopted.
