The best way to mitigate manufacturing delays is by consistently communicating with suppliers
Have you ever opened up your inventory tracker or your clear-to-build report and realized that the critical parts you need either didn’t show up or are not arriving as scheduled? Panic mode sets in—not having the necessary inventory you need to hit your build plan is a big problem.
In an ideal state, these delays and problems would not happen because your suppliers would always deliver the goods on time and in full. Or alternatively, if the ETA of the parts were to change, the supplier would promptly notify you of the change so you can adjust and plan accordingly. The unfortunate reality is that for many reasons, purchase orders (POs) change or get delayed regularly.
Why does this happen? A supplier can forget to enter the PO into their planning system, they have an internal production disruption, or they forget to follow up with their sub-suppliers to mitigate further upstream delays. Regardless of the reason, for a manufacturer, the impact of these delays can be severe.
Improving the visibility and predictability of delivery times and inventory shortages
Delayed delivery times and inventory shortages impact the predictability and efficiency of your production flow. When you lack a holistic view of material availability, you fail to maximize your build capacity and can experience factory downtime, bloated operations, and missed deliveries to customers, which can negatively impact revenue. The benefits of constantly communicating with your suppliers and getting timely updates helps to:
- Foster strong relationships with your suppliers. When disruption inevitably happens, a vendor might be forced to choose how to allocate their inventory. A strong relationship built on trust and loyalty can ensure your supplier looks out for you when you need it most.
- Gain more supply-chain transparency so you can plan accordingly. As a result of building strong relationships with your suppliers, a loyal supplier will communicate any large risks or issues they are experiencing, which will make it much easier to mitigate supply-chain disruptions and associated risks.
- Improve quality and quantity of updates. A successful relationship with suppliers will lead to more accurate and actionable data through the quantity and quality of updates being shared. It will then be easier to handle issues or delays collaboratively once you are both equipped with the timely information you need to make important forecasts and build decisions.
The challenges with gathering supplier updates today
The truth is that many manufacturing and procurement teams continue to use manual processes to manage and track purchase orders at scale, yet it’s extremely complex and sometimes physically impossible given the sheer volume of updates. If you’re manually tracking just a few purchase orders, that is doable. But with hundreds, or even thousands, of emails and communications about parts and delivery times, it’s easy to miss one or leave essential questions unanswered. Manual PO tracking systems are also prone to human error, so it’s not unusual for teams to accidentally mis-type a part number or PO.
On the flip side, using a supplier portal to improve collaboration and receive updates has low adoption—34% at best. Yet vendor adoption of the invoicing features in a vendor portal is high, because they need to get paid. In addition, suppliers already need to access a number of different portals for different reasons. The research shows that "99% of suppliers must interact with at least two or more systems, and 10% of the largest enterprises revealed that the number of supplier-facing systems is between 11 and 20," so throwing another one into the mix does not yield positive results. With a solution like Factor, however, another system is not added to the growing list, it eliminates one.
Best practices for following up with suppliers
Knowing the right timing, language, and how to prioritize your outreach to suppliers can be challenging. All of these variables can have an impact on your communication tactics. A fundamental principle to remember is that the longer the lead time, the less you will need to request frequent updates. As the due date approaches, it becomes more important to contact vendors for the latest updates and information on delivery and shipping.
To efficiently collect data from vendors, clarity in the inquiry is vital. We recommend tracking the following key elements: the estimated dates of shipment, the anticipated delivery dates, and the total number of items in each shipment. When sending out an update request, ensure that you are clear in what details you’re asking the vendor for.
It’s also imperative that the items you seek updates for are identified using the same item or order numbers that your vendors recognize. It’s common to encounter situations where the part number used internally for a buyer differs from the one listed on the Purchase Order (PO) given to a vendor. To mitigate this issue, we suggest that buyers establish a clear mapping between their internal part numbers and the manufacturer's part numbers, enabling vendors to accurately provide updates on the specific items in question.
The diversification of channels and cadence across suppliers is important to consider as well. To optimize communication, it's important to analyze the response patterns across different suppliers. For example, some suppliers might be more responsive to emails sent in the early morning, while others may prefer phone calls or text messages in the afternoon. By tracking these patterns, you can tailor your outreach strategy to each supplier, thereby increasing the likelihood of timely and accurate responses.
In addition to choosing the right communication channels, the timing of your outreach plays a crucial role. For instance, sending a follow-up email or making a phone call towards the end of the week might be more effective as suppliers wrap up their weekly operations and plan for the upcoming week.
Lastly, when reaching out to vendors, it's essential to be precise and concise in your communication. Clearly state the purpose of your inquiry, whether it's to confirm shipment dates, verify delivery times, or check on the status of specific items. This clarity helps in avoiding confusion and ensures that the vendor can provide the exact information you need.
How automation can help
To guarantee the arrival of parts on time and to meet your build plans, POs need to be tracked and ETAs need to be updated regularly through proactive follow-up with suppliers. All of this is much easier to do with automated outreach. Even more, the power of new AI capabilities remove the need for suppliers to adopt ineffective supplier portals.
With an automated tool like Factor, you can solve supply chain disruptions before they become problems. The software integrates into your existing tools via API, including your ERP or MRP, to close critical communication gaps between your resource planning and your suppliers.
Factor proactively does outreach to suppliers for you so they can confirm POs and update the estimated time of arrivals. The data shows suppliers are updating this information 5-10x more frequently and therefore, the details they provide are more accurate. Factor also alerts you to changing arrival dates earlier. By feeding this data back into the MRP, manufacturing teams can increase the accuracy of their planning, and companies get more out of their resource planning systems and processes.
Additionally, with Factor’s AI solution, users can automatically get the data sitting in their email and messages parsed and pushed back into the ERP to be updated accordingly. When a supplier reaches out to communicate a delivery delay or provide an advance shipping notice, this data can be ingested and automatically updated in the systems you need. Not only can Factor read and parse emails, but also attachments. This could be a PO confirmation PDF, a failed inspection report in Excel, and more.
As a result, supply-chain and procurement teams can grow their supplier base (i.e. dual sourcing, adding localization, and supplier diversity) without having to double or triple the size of their teams. It also enables the team to spend more time on strategic goals like relationship development, forecast accuracy, and more.
The Factor outreach framework
- Once a PO is created, Factor reaches out to the vendor associated with the order to alert them of the new item /asks for PO acknowledgement
- Once acknowledgement is established by the vendor, Factor schedules an automated update request cadence based on an order's lead time
- The vendor does, or does not, provide shipping information and delivery dates
- Vendors sometimes reply to emails directly or send one off emails to buyers like "this will go out at the beginning of next week"
- Factor then takes this unstructured text contained in an email and parses it into a machine-readable date. This could include an expected delivery date such as 12/11/2024, or a Fedex shipping code.
- Factor follows up with vendors on date changes according the scheduled request cadence
- Factor alerts the buyer of vendors that are unresponsive
- Factor alerts buyer "Past Due" orders when an expected delivery date passes
Additional variables to consider
- If vendors do not make an update in response to the first request, Factor sends a reminder with escalated language to let them know the importance of making updates
- In the case for items with a due date 7 or less days away, we only send one update request on the due date
- If the item becomes past due at any point, Factor does not send a typical update request and instead sends a past-due notification requesting an urgent update
The data points we recommend you track for the most success:
The data we recommend you track from vendors include:
- Estimated delivery date
- Estimated ship date
- Shipment Quantity
In combination with your due dates, we suggest measuring the success of you vendor update strategy by tracking the following:
- Average number of updates per items/orders
- Percentage of items/orders with 1 or more vendor updates
- Percentage of vendors with 1 or more updates
- Average days late per delivery item
- Number of orders with new delivery update prior to due date
- On time delivery rate
Download our supplier outreach cadence to improve the quality and quantity of supplier updates today
Using the above Factor methodology, we’ve developed a sample supplier outreach cadence to help you improve your communication and collaboration with your suppliers.
How our customers are using Factor to improve supplier communication
Customers using Factor are seeing dramatic increases in supplier updates, in both frequency and accuracy. Vecna Robotics for example has increased the frequency of updates from vendors by 5x and they receive more accurate and more actionable updates from suppliers. There is 100% vendor adoption in the Factor portal, helping to streamline updates and communication. As a result, the team is empowered with quality data to better forecast and plan and the team has more time to focus on strategic initiatives.
With Factor, All Safe Global now receives 5x more frequent updates for every PO and the purchasing team is saving 30% of their time weekly, by automating supplier outreach. Now they have freed up more time to focus on strategic projects, like diversification and negotiations. Most importantly, they are able to provide more accurate forecasts to customers, creating a more predictable supply chain and improving customer satisfaction.
Click here to learn more or request a demo today to see how Factor can improve your operations and help you get better data from your suppliers to save money and time. Our supply chain experts are ready to provide a tailored walkthrough focused on your specific challenges and goals.