Supplier Delays: A Backup Plan for Importers and Buyers

Supplier delays are the main risk for buyers this month, and a short plan now costs far less than an empty shelf later. This note gives Vietnamese importers and buyers five steps to take this week, in plain order, with no special tools.

Why this matters now

The new coronavirus outbreak has reached a large scale. The World Health Organization reported 74,675 confirmed cases in China and 1,073 confirmed cases in 26 other countries as of 20 February 2020. Travel limits and local controls are part of the response in the worst hit areas.

For buyers, the lesson is simple. When people cannot move freely, goods move late. Factories can restart slowly after the Lunar New Year break. Trucks, ports and customs offices can run with fewer staff. Parts and raw materials that you expect in two weeks may take four.

Nobody can say how long this will last. So the goal is not to predict the delay. The goal is to be ready for one. This is general business information and not medical advice.

Sources: WHO, Coronavirus disease 2019 (COVID-19) Situation Report 31, data as reported by 20 February 2020 (who.int/docs/default-source/coronaviruse/situation-reports/20200220-sitrep-31-covid-19.pdf).

Step 1: Map who really supplies you

Write down every product you buy and who makes it. Go one level deeper than your direct seller. Ask where the factory is, where the raw materials come from and which port ships the goods.

Many buyers find that two "different" suppliers use the same factory or the same material source. That is one risk, not two. Mark each item as high, medium or low risk based on how many weeks you could run without it.

Keep the map on one page. Update it when a supplier tells you something new.

Step 2: Ask suppliers direct questions

Send a short written message to each key supplier this week. Ask these things:

• Is the factory open, and at what share of normal output?
• Are staff able to return to work?
• What is the new ship date for open orders?
• Which raw materials or parts are short?
• Who is the one person we can call about changes?

Keep every reply on file. A supplier that answers fast and clearly is easier to plan around than one that says "no problem" and gives no date. Silence is also useful information.

Step 3: Build safety stock on your fastest sellers

Safety stock is extra inventory held to cover a late delivery. You do not need it for every item. Start with the products that sell fastest and the ones that are hardest to replace.

A simple rule: take the weeks of delay you want to survive, then multiply by your average weekly sales. If you sell 200 units a week and want a four week cushion, hold about 800 extra units. Check that against cash and storage space, because extra stock ties up money.

Use a short order cycle where you can. Several smaller orders let you react faster than one very large order.

Step 4: Line up a second source

A second source is a backup supplier you have already vetted. Do not wait for the first one to fail. Ask for samples, prices and minimum order sizes today, even if you place only a small test order.

Look for a backup in a different region where possible. Within Vietnam, a local maker may cost more per unit but ship in days. That higher price can be worth it for items on your high risk list.

Check each new supplier the same way you checked the first. Ask for business registration, product documents and references before you commit money.

Step 5: Talk to your freight partners early

Call your forwarder, customs broker and shipping line now, not after a box is stuck. Ask about current transit times, cargo space and any new document rules at the ports you use.

Share your order calendar with them so they can warn you. Ask what they would do if a port slowed down, such as switching to another port or another route. Agree on who pays for storage if cargo waits.

Check your insurance and your contract terms at the same time. Many contracts name a delivery date but say little about what happens when events outside anyone's control cause a delay. Clear wording now prevents arguments later.

Tell your own customers early

If a delay will reach your customers, say so before they ask. Give the new date you believe, and update it when it changes. Customers forgive a late order far more easily than a surprise.

Offer options where you can: a partial shipment, a similar item, or a later date with a fair price. Keep a simple log of who was told what and when.

A one page checklist

• List your top 10 products and their real sources.
• Rate each as high, medium or low risk.
• Send questions to every key supplier and file the replies.
• Set a safety stock target for each high risk item.
• Request samples and prices from one backup supplier per high risk item.
• Call your forwarder and broker and agree on a plan.
• Review the whole list every week until deliveries settle.

Small steps taken early are what protect a business when a supply line slows down.

Sources: WHO, Coronavirus disease 2019 (COVID-19) Situation Report 31, data as reported by 20 February 2020 (who.int/docs/default-source/coronaviruse/situation-reports/20200220-sitrep-31-covid-19.pdf).

Sources

• World Health Organization, Coronavirus disease 2019 (COVID-19) Situation Report 31, 20 February 2020.