Last updated on Aug 2, 2024

Your supplier just caused a delay during your peak production season. How will you navigate this setback?

Navigating a supplier-induced delay during your peak production season is akin to steering a ship through a storm. You've planned, forecasted, and optimized your manufacturing operations to meet the high demands, and suddenly, a supplier's setback threatens to derail your efforts. It's a situation that can induce panic, but with a clear strategy and swift action, you can mitigate the impact. In this article, you'll discover how to handle such disruptions effectively, ensuring that your operations remain as smooth as possible despite the unexpected hiccup.

1 Assess Impact

Firstly, you need to understand the extent of the disruption. Analyze how the delay affects your production schedule and inventory levels. Consider the specific components or materials that are delayed and identify which product lines are impacted. Calculate the potential lead time increase and how it might affect your ability to fulfill customer orders. This assessment will provide a clear picture of the setback's magnitude and serve as a foundation for your response strategy.

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Marcelo Maciel Rabelo, MSc. Eng.

Operations | Manufacturing | Quality | Lean & Industry 4.0 | Supply Chain | Purchasing | Logistics | Business Strategy | Operational Excelence | Global Business | Change Management
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That's right! The first action is to assess the magnitude of the impact and identify who is responsible for generating information. Schedule daily contacts with the supplier, get the best date for new deliveries, and try to reschedule production to eliminate or mitigate the impact. Reach out to customers to negotiate rescheduling of deliveries.

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Pankhaj D

MBA(OM) - SIOM'26 | Ex-Material Planner @Flex | CII SCM PRO | Digital Supply chain | Ex-Suba Solutions | Mechanical Engineer
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When there is a disruption in your schedule by a supplier: 1. Calculate your total revenue from on hand clear to build inventory 2. Prioritize critical FGs based on customer priority 3. Source from open market vendors and other AVL suppliers 4. As for the PPV, try to charge from the supplier who caused the disruption. Normally this can be done by discounting the next PO to claim the PPV.

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2 Communicate Early

Once you've assessed the impact, communicate with your stakeholders promptly. This includes internal teams like sales, marketing, and customer service, as well as external stakeholders such as customers and investors. Transparency is key; by keeping everyone informed, you can manage expectations and prevent misinformation. Offer realistic timelines for resolution and maintain open lines of communication throughout the ordeal.

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Marcelo Maciel Rabelo, MSc. Eng.

Operations | Manufacturing | Quality | Lean & Industry 4.0 | Supply Chain | Purchasing | Logistics | Business Strategy | Operational Excelence | Global Business | Change Management
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Once the action team is in place and the information is clear, let everyone know that they need to evaluate other impacts on billing, late delivery fines, or customer service. Provide reliable restart dates! Don't make up information. Communicate with your engineering and purchasing departments to evaluate possible alternatives to compensate for the delay.

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3 Alternative Sourcing

With the impact assessed and stakeholders informed, explore alternative sourcing options. Investigate whether other suppliers can provide the delayed materials or if you can substitute them with similar components. It's crucial to evaluate the quality, cost, and delivery times of these alternatives to ensure they align with your operational standards and financial constraints. Establishing relationships with multiple suppliers can be a strategic move for future disruptions.

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ajit jha

Senior Supply Chain Manager at Synokem Pharmaceuticals Ltd
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Any product requirement must have atleast 2-3 suppliers in order to mitigate the crucial demands. So relying on just one supplier will be fatal and non deserving.

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ajit jha

Senior Supply Chain Manager at Synokem Pharmaceuticals Ltd
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Any product requirement must have atleast 2-3 suppliers in order to mitigate the crucial demands. So relying on just one supplier will be fatal and non deserving.

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Daryl Gallagher

CNC Machinist at RMS Surgical - Cretex
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There are 2 kinds of parts: 1) Mission Critical 2) Mission Noncritical. If you have only 1 source for Mission Critical parts, you're setting yourself up for failure. On the flip side: As a supplier, NEVER promise something that you cannot deliver. Mistakes happen, machines break down, people get sick and can't work, Snowstorms cause road closures. And on, and on, and on.

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4 Adjust Production

Adjusting your production schedule is often necessary to cope with supplier delays. Prioritize product lines based on factors such as demand, profitability, and contractual obligations. Consider whether you can reallocate resources, such as labor or machinery, to other products that aren't affected by the delay. This may involve ramping up production of in-stock items or pre-producing components for future assembly.

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Marcelo Maciel Rabelo, MSc. Eng.

Operations | Manufacturing | Quality | Lean & Industry 4.0 | Supply Chain | Purchasing | Logistics | Business Strategy | Operational Excelence | Global Business | Change Management
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In addition to the criteria of demand, contractual obligations, and profitability for adjusting the production program, evaluate whether there are alternatives for obtaining product and redistributing it to other customers, such as customers with excess inventory and inventory at distributors. Reallocate machinery and labor to quickly regain control of the situation, including the use of overtime and outsourced resources.

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5 Inventory Management

Effective inventory management can be your saving grace in times of supplier delays. Review your current inventory to identify any excess stock that can be used to fill gaps caused by the delay. Implement just-in-time (JIT) inventory practices if they're not already in place, which can help reduce the impact of future supply chain disruptions. Additionally, consider whether it's feasible to use safety stock as a buffer during this period.

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6 Strategic Planning

Finally, use this experience as a learning opportunity for strategic planning. Review your supplier management policies and consider diversifying your supplier base to reduce dependency on a single source. Evaluate your supply chain for potential risks and develop contingency plans for different scenarios. By preparing for future setbacks, you can enhance your manufacturing operations' resilience and agility, safeguarding against similar challenges down the line.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Your supplier just caused a delay during your peak production season. How will you navigate this setback?

1

2

3

4

5

6

7

1 Assess Impact

2 Communicate Early

3 Alternative Sourcing

4 Adjust Production

5 Inventory Management

6 Strategic Planning

7 Here’s what else to consider

Manufacturing Operations

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Your supplier just caused a delay during your peak production season. How will you navigate this setback?

1

2

3

4

5

6

7

1 Assess Impact

2 Communicate Early

3 Alternative Sourcing

4 Adjust Production

5 Inventory Management

6 Strategic Planning

7 Here’s what else to consider

Manufacturing Operations

Rate this article

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