Why a short delivery costs more in admin than it did in stock

Follow one short delivery all the way through #

A customer is sent eleven cases instead of twelve. The stock value of the error is one case. Here is what it sets off.

1. The customer rings, usually the next morning, usually to whoever answers

2. Somebody has to establish what was ordered, what was picked and what was signed for

   Which means finding three documents.

3. Somebody decides whether it is a picking error, a keying error, a customer counting error or a theft The judgement

   The four have different consequences.

4. A decision is made: credit it, redeliver it, or add it to the next drop

5. A credit note is raised, or a replacement order is keyed, or both

6. The ledger is adjusted so the invoice reflects the agreed position

7. Credit control is told

   Because the invoice is now in query and will not be paid until it is not.

Step three is the only one that needs judgement. Steps one, two, five, six and seven are retrieval, document production and notification. Step four is a small decision that a clear policy usually settles.

Where the money really goes #

Trade suppliers tend to measure errors in stock value, because that is the number the accounts show. It is the wrong number. The cost of a short delivery is dominated by three things that never hit a stock report.

• The invoice stops

  One disputed line typically holds the whole invoice. A query worth twenty pounds can park a four figure invoice for weeks, and putting it back in motion is the slow work described on the credit control page.

• The evidence has to be assembled

  Order, pick, delivery note, signature, invoice. If any of them is on paper or in someone's mailbox, the investigation costs more than the credit. This is the practical argument for treating proof of delivery as a system rather than a filing cabinet.

• The relationship is spent

  Customers tolerate errors and remember how they were handled. A credit raised within the day is a story about a good supplier. The same credit raised after three chases is a story about a supplier who has to be watched.

What the law entitles each side to #

Section 30 of the Sale of Goods Act 1979 governs delivery of the wrong quantity. Where less is delivered than contracted, the buyer may reject the goods; if they accept them, they must pay for what was delivered at the contract rate.

Where more is delivered, the buyer may accept the contract quantity and reject the rest, or reject the whole. In either direction the buyer cannot reject where the difference is so slight that rejection would be unreasonable.

Two things follow for the admin.

Errors are a report, not just a cost #

Every credit note is a piece of evidence about where the process is weak, and in most depots that evidence is never read. Sorted by cause, the same list of credits tells you whether you have a picking problem, a product data problem, a customer who consistently under-reports, or one round where paperwork is always thin.

That analysis is rule shaped and nobody has time for it, which is why credits get treated as individual inconveniences rather than as the cheapest management information in the building. It is the same pattern described in repeat ordering: the work of comparing is being done by people, so the pattern across the comparisons is never seen.

Which parts run on rules #

What to count #

For one quarter, count credit notes by cause, by customer and by the elapsed time from claim to credit. Then set them against the invoices they touched rather than against the stock value, and add up the days those invoices spent stationary.

That total is the real cost of picking errors, and it is usually the first time anybody in the business has seen it as one number. The admin time calculator covers the office hours, and which jobs are worth automating sets out the test for deciding whether work of this shape qualifies.