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The Hidden Costs of Late Purchase Orders: How Collaboration Saves You Money

by Phillip Pavelka
May 8, 2024

We've all been there: a crucial project comes to a screeching halt because a promised delivery hasn't arrived. Late purchase order lines (PO lines) aren't just frustrating, they can be a major drain on your company's finances.

The impact goes beyond simple delays. Each late PO line can incur hidden costs that range from $10 all the way up to thousands of dollars. These expenses add up quickly, encompassing:

  • Expediting fees: When a delivery is behind schedule, you might have to pay extra to rush the order through.
  • Inventory management: Disruptions to your production flow can force you to hold extra inventory to avoid stockouts, tying up valuable resources.
  • Out-of-market costs: If your primary supplier can't deliver, you might be forced to source the materials elsewhere at a premium price.
  • Manufacturing downtime: Production lines grind to a halt when essential materials are missing, leading to lost productivity and potential revenue.

So, what can you do to mitigate these risks? The answer comes down to 1) Transparency, 2) Partnership and 3) Tool for success


1 - Transparency is Key

When both you and your suppliers have real-time access to critical purchase order information, collaboration becomes a breeze. This transparency empowers suppliers to:

  • Proactively manage their production schedules: Knowing your upcoming needs well in advance allows suppliers to plan their own production accordingly, reducing the likelihood of delays.
  • Identify potential issues early on: With clear visibility, suppliers can flag potential challenges before they become full-blown problems, giving you time to adjust your plans.
  • Communicate effectively: Real-time collaboration platforms eliminate the noise of phone calls, endless emails, and outdated spreadsheets. This streamlined communication ensures everyone is on the same page.


2 - The Power of Partnership

Studies show companies that prioritize supplier visibility experience a dramatic 35% to 40% improvement in on-time PO line fulfillment.

Think of your suppliers as an extension of your own manufacturing operation. By providing them with a clear window into your needs, you're fostering a true partnership. This collaborative approach leads to greater efficiency, reduced costs, and a smoother production flow for everyone involved.


3 - Tools for Success

There are a number of software solutions available, like Leverage, that can help bridge the communication gap and create a more transparent environment. These platforms provide a central hub for real-time information sharing, streamlining communication and ensuring everyone is working from the same data.

By investing in supplier visibility, you're not just improving communication; you're making a strategic investment in the success of your entire operation. Don't let late PO lines cost your business time and money. Embrace collaboration and unlock the hidden potential of a strong supplier partnership.


Want to learn more about Leverage? Schedule a demo today. 


Post by Phillip Pavelka