The value of orders not delivered on time

In a harmonized performance process, late deliveries of supplied parts are guaranteed to lead to the feared backlog, provided the delay is not compensated for by the corresponding safety times. 

Imagine a situation in which an automotive supplier delivers final assembly parts just a few hours later than requested. The assembly line comes to a standstill. That costs him a lot of money. For this reason, it does not happen very often How can it be that in other industries, many deliveries arrive days or even weeks too late and production still manages to go on What safety stocks are behind this  

You should observe the value of all overdue orders for at least two reasons  

in an enterprise that has not been harmonized, you discover what an order value lies in the past, you will be alarmed. Your capital tie-up would be even higher by precisely this value, if your suppliers were all to deliver on time. 

Once the shock has subsided, you will be able to detect considerable inventory reducing potential in this value. After all, with so many delayed deliveries your production is actually not supposed to run at all. If it does, you can assume that you have a safety stock and backlog that is too high - they both have the same effect. 

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