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The Costs of Production Delays for Vendors

July 6, 2022

Key takeaways:

  • When production delays hit suppliers, it can quickly lead to a fear of losing buyers and a cascade of backlogged orders.
  • A fragile supply chain, lack of materials, poor quality, and communication barriers are the main reasons for repeated production delays.
  • New technology tools can help vendors increase efficiency and minimize delayed production schedules.
  • A digital production tracking software gives visibility over production processes to better manage the risk of delays, changes, and cancellations.

Production delays adversely affect all stakeholders, from manufacturers and suppliers to brands and retailers to customers. Suppliers have a unique set of costs when it comes to production delays, from damaged buyer relationships to overwhelmed employees.

When production delays hit suppliers, it can quickly lead to a fear of losing buyers and a cascade of backlogged orders. All of this is made worse by decentralized communication, a lack of standardization, inefficient methods of reporting, and a lack of tools to demonstrate compliance and quality results.

Below, we examine why production delays happen, their consequences for vendors, and how to minimize them using digital production tracking software.

Why production delays happen

The following are four reasons for repeated production delays that affect manufacturers and suppliers:

1. Fragile supply chain

Dispersed, decentralized supply chains are a major cause of production delays. Design, material sourcing, manufacturing, customization, and shipping often occur in different places, creating lags due to inventory, organization, and product transport. Having disconnected processes and people makes your supply chain less resilient when an issue occurs in any of these areas.

2. Lack of materials

“Shortages are leading to delays,” writes IPC, with lead times increasing across the industry and production delays of 8+ weeks reported among 31% of respondents to a recent survey. When suppliers can’t forecast these shortages, they can’t prepare for them.

3. Poor quality

Quality standards are usually specific for each brand and retailer. When products fail to meet standards, they are often sent back to vendors for rework, resulting in delays and penalties. Without a means of connecting quality management to production tracking, it is difficult to ensure on-time shipping and high product quality.

4. Communication barriers

Evidence suggests that manufacturing companies face significant communication barriers. When communication isn’t centralized, it tends to occur over various means like phone calls, texts, and emails. This can impact production and delivery by slowing down supply chain collaboration and the completion of key milestones.

Inefficient and decentralized communication opens the door for unclear quality standards and product requirements, and people getting overwhelmed by communications coming in from multiple sources. This creates more room for mistakes and rework, which in turn can negatively affect delivery dates.

How production delays affect suppliers

Production delays tend not to happen in isolation but rather as a recurring problem. Without a digital production tracking solution, these delays will not improve. This leads to costs for vendors:

1. Loss of market share

Continued delays mean your organization can’t operate well. Unfortunately, this will eventually lead you to lose your competitive position in the market, particularly in today’s world where buyers expect the best performance from their suppliers in order to retain their services.

2. Loss of buyer trust

Even more damaging than the loss of buyers is damage to your company’s reputation. By allowing repeated production delays to occur, even in the face of disruptions, you can seriously damage your image among brands and retailers and imperil your business. A recent survey found that 80% of B2B buyers have switched suppliers at least once in the past 2 years in search of better service.

3. Loss of revenue

Brands and retailers can charge significant amounts for delays through supply chain chargebacks. Penalties are a common consequence of production delays and non-compliance and can range from 1% to 5% of the gross invoice amount.

How digital production tracking software can help

A digital production tracking software like Inspectorio Tracking can revolutionize the way you manage your production chain, giving you the ability to fight production delays even during turbulent times.

Here’s how a digital solution can help:

1. Improved production chain management

New technologies powered by data and machine learning can help you better plan your order placement and lead times. With a full view of the production processes, you can better manage the risk of delays, changes, and cancellations.

Inspectorio Tracking gives you access to accurate production data so you can quickly evaluate factory performance. This lets you identify the root causes of production delays so that you can drive continuous improvement programs.

2. Digitized Time and Action calendar

Meeting a deadline starts with having an action plan for how you will manage your Time and Action (T&A) calendar. A digitized T&A calendar gives you the following benefits:

  • Digital data keeps you updated
  • Effective in-app communication with all stakeholders means no more long Excel files or follow-up emails
  • Detailed activity logs help you identify risk, changes, and/or delays and uphold accountability.

3. Better collaboration

Instead of simply notifying buyers when there’s delays, a digital production tracking solution lets you work with them by building transparency. With better communication comes better understanding of one another’s needs and motivations.

By using a digital solution to manage production tracking and openly sharing information, you can nurture a data-driven relationship with buyers. Your company can get things right the first time, standardize workflows, zoom in on problem areas, and use data to its fullest potential.

4. Real-time analytics

Switch from reactive to proactive supply chain management. Share production milestones and analytics with all stakeholders, allowing you to make data-driven decisions.

Change the game with Inspectorio Tracking

Although the global supply chain is still fragile, vendors can ensure profitability by adopting tools for better enterprise management. This means investing in technology to help improve internal processes. To learn how Inspectorio Tracking can help you collaborate and cooperate better with buyers, contact us.

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