How to Proactively Mitigate At-Risk Orders

by | Sep 16, 2020 | Collaboration, Retailers, Supply Chain, Vendor Management

As Murphy’s Law states, “whatever can go wrong, will go wrong.” This adage certainly holds true when it comes to managing the day-to-day order process. Missing orders, back orders and late shipments are just a few of the common supply chain problems that can cause issues with customers.

In fact, up to 50 percent of orders between buyers and sellers are incomplete, late or otherwise problematic. But, sifting through hundreds of orders to find potential issues is not a practical solution.

That’s why many retailers and distributors increasingly rely on exception reports as a key piece of their supplier performance management programs and a way to improve supply chain collaboration.

Looking for greater visibility into at-risk orders? Download our Supplier Performance Management Playbook to learn how to better manage supplier performance.

How does exception reporting work in the supply chain?

Exception reports identify instances in which performance deviated significantly from expectations. This concept applies to many areas, including how you work with suppliers. You can use exception reporting within an order cycle to focus on orders most at risk.

For example, exception reporting can identify if an order has not been received, acknowledged, changed, or is at risk of missing the expected ship date. You could then work with that supplier to remedy the issue. Or you could find an alternate supplier that can meet your expectations. By doing so, you can prevent any issues from affecting your customers. 

Eight questions that can identify at-risk orders

Here are some commonly asked questions from buying organizations when performing day-to-day tasks. Exception reports can help you quickly and easily answer these questions.

1.What is the supplier’s available inventory on-hand?

If a supplier has less inventory on hand than what you need, this could be a sign that you need to find a secondary supplier.

2. Did the supplier receive the order?

If the supplier has not returned a functional acknowledgement within your desired time frame, this can be an indicator to contact the supplier to see if the order was received or if it’s missing. 

3. Which orders have not been acknowledged by the supplier?

Suppliers send electronic purchase order acknowledgements indicating whether they accept, reject or need to change the order. Without an electronic acknowledgement, you don’t have assurance of the supplier’s intention to fulfill that order.

4. Which orders are in jeopardy of not meeting a ship date?

When a supplier doesn’t send an advance ship notice within your requested ship window, the order could be at risk. 

5. Which orders are in jeopardy of not meeting a cancel date?

The cancel date on the purchase order is a deadline when outstanding orders will be canceled if not fulfilled or shipped. Exception reports can notify you of orders that may not arrive prior to their cancel date. 

6. What is the status of a customer order?

Track the status of customer orders using data from the advance ship notice. 

7. Which orders are past their ship date?

Easily see all orders at risk of missing the ship date and those that are beyond the ship date. 

8. Which invoices have discrepancies between what you ordered and what the supplier shipped?

Create a three-way match between what you ordered, what your suppliers shipped and invoiced. This takes the manual work out of invoice reconciliation.

Automate exception reporting with SPS Commerce

Fortunately, there are automated ways to determine whether orders are at-risk. 

By working with SPS Commerce, you can gain insights into order status that make it possible to identify issues before they affect your customers. Improve supplier accountability and access key metrics such as:

    • Order accuracy, such as wrong quantities or products
    • Order acknowledgements, including whether orders are missing
    • Order cancellations
    • Order changes
    • Ship timeliness, such as late, early or missed shipments
    • Short shipments or overages
    • Fill rates

Want to learn more? Download our Supplier Performance Management playbook or contact us today.

Catherine DeCosse
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How to proactively mitigate at-risk orders

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