So You Have A Backorder

We are taking a slight detour on our discussion of lifecycles to delve into the wonderful world of backorder (cuts, shortages, or in essence- the inability to fulfill orders). A world quite a few are experiencing right now as the Global Supply Chain continues to be stretched to the limit in an unprecedentedly difficult time.

Sometimes, no matter how well planned, executed and tracked you experience backorder.

We all have at one point or another been stuck in the middle of frustrated/disappointed customers, tense Sales’ Teams and everyone looking for root cause. There is a panic and a scurrying to fix the problem and not replicate ever again.

It’s an incredibly unpleasant, challenging time for everyone - internal teams, suppliers and customers.

What do you do? What can you do?

There are 3 key moments to dealing with a backorder- the first requires up front planning, the second communication and creativity, and the third, objective, blame-free analysis and process improvement.

Preventative:

'Preventative' does not refer to forecast accuracy, planning diligence or proper inventory/lifecycle management. What 'preventative' means in this scenario is the up front establishment of agility. We are assuming the backorder has already hit so all forecast/planning/inventory management techniques have missed on some level. Now you need to find a way to get more inventory. QUICKLY. Part of Supply Chain's function in a company is to minimize risk, to foresee all the ways in which a plan can go terribly wrong and create bumper lanes (analogies will be all over the place in this post, adding to the element of chaos with backorder). If you are single sourced, immediately develop relationships with a second source. If one of your items is from overseas, ensure you have a local supplier for smaller, urgent runs (yes - likely more expensive), for your critical components, packaging or raw materials have an alternative option wherever possible, keep semi-finished product as a 'just in case' for quick final build outs. These are a few ideas - the main point is to look at your overall supply chain and determine where you are vulnerable (ie- single sourced or dependent on one specific material/process/etc) and develop a backup plan ASAP and keep those secondary options current and active. When the fun hits the fan, the goal here is to shift immediately into one of your backup options for immediate resolution.

Get Creative & Communicate:

As soon as risk is seen, begin to pull in the rest of your internal Team for ideas. The brilliant folk in PD often have incredible solutions that work with your products' capability and will not impact function. Lean on your partnerships in the supply chain also- maybe one of your Supplier’s customer's can spare some line time or materials to help? Maybe your Supplier of X has a great supplier of your needed component Y? What different freight/delivery options do you have? Can you deliver direct to the customer and skip the middle step of warehousing? Can you allocate orders to ensure your key customers stay fulfilled? Can you convert existing inventory into the needed item? Can you produce in a smaller amount to reduce turnaround time? Can you swap items on the priority list? If none of these avenues yield a solution- reach out to the amazing people on your Sales Team- they can work directly with the customer to determine if extra time/reduced qty is an option or substitute an item where it makes sense. Some pretty incredible saves have occurred through communicating and getting creative together-both with your internal and your external Team. *Added Plus- those moments become shared stories/wins/bonds*

WTH Happened and How Do We Never Do It Again???

Now you are on the other side. Inventory is flowing again and the Team can shift focus into finding the gaps in the process. 99.9999999999999999999999999999999999999999999999999999999999999999999% of the time, what went wrong was a process issue. Like many unfortunate experiences- there are often gifts hidden. In the case of backorder, you and your Team have the opportunity to address weaknesses in your Supply Chain. 5 Why's* are useful here. Truly- after each what went wrong and why, dig into that next ‘why’ until you can get to the foundation of where the missing process, tool, data is - without blame, objectively and productively- with the intent of making real change. No one wants (or has time) to report on root cause endlessly for fun. Pick some biggies, figure out the REAL issue and make change! TOGETHER! And that is one of the best parts of any company's Supply Chain- it can always be made better.

*See Toyota Production System - 5 Whys process for root cause analysis