How to Manage Partial Shipments?

Partial shipments are deliveries of single orders in multiple batches or stages, where different portions of the order are sent at different times instead of being fulfilled all at once. Let’s explore how to manage them both from the customer’s and the supplier’s perspective.

What is a partial shipment?

A partial shipment is the delivery of a single order in multiple shipments. For example, if a customer has ordered 100 units but receives them in two deliveries of 50 units each.

There could be several reasons for an order to be delivered in parts:

• Partial shipments were agreed upon beforehand.
• Goods were in short supply and the client agreed to partial deliveries.
• Some items were damaged during delivery.
• The order was messed up.

Partial shipments can therefore be both a bona fide fulfillment method and an unwanted mistake.

Advantages of using partial shipments

Using partial shipments as a supply chain management technique can be beneficial to both customers and suppliers.

From the customer’s perspective, the benefits of partial shipments are:

• Faster access to essential items. Partial shipments enable the customer to receive critical items before the whole order is ready for delivery.
• Reduced production stoppages. Receiving materials in parts allows manufacturers to continue production rather than wait for the whole order to arrive.
• Reduced warehousing load. Spreading out the arrival of goods enables companies to reduce congestion in the warehouse, especially in the receipt area.

From the supplier’s perspective, the benefits of partial shipments are:

• Leaner inventory. Sending out goods as soon as they are ready helps companies operate at lower inventory levels, reducing inventory costs.
• Reduced delays. Being able to deliver a portion of an order earlier than the rest is most often better than delaying the whole order.
• Increased customer satisfaction. Receiving critical items earlier than the rest of the order enables the customer to continue operations without stoppages.

Disadvantages of using partial shipments

Partial deliveries can also complicate matters, whether you are the receiving end or the supplier.

Disadvantages of partial shipments for customers are:

• Increased management complexity. Multiple shipments often also mean multiplying the time spent on tasks such as ordering, delivery coordination, payment and accounting, and order tracking.
• Reduced inventory buffer. Receiving only the items that are needed immediately leaves no room for safety stock, meaning that in case of a demand spike, a stockout occurs that could disrupt the whole operation.

Disadvantages of partial shipments for suppliers are:

• Higher operational costs. Fulfilling partial shipments puts a larger strain on the supplier as clerical and customer support tasks increase along with the number of shipments. Shipping fewer items at a time also increases shipping costs per unit.
• Increased logistical complexity. The higher the number of shipments, the more complicated the logistics as delivery schedules get tighter and delivery personnel get overloaded. Managing product returns adds another layer of complexity.
• Reputation risk. Being unable to fulfill complete orders can impact the supplier’s reputation, as customers may perceive them as unreliable or disorganized.

Managing partial shipments as a customer

Managing partial shipments efficiently as the receiving party revolves around reducing complexity, improving tracking, and minimizing delays or errors. Here’s how to manage partial shipments effectively:

Establish priority items

First, you’ll have to determine which items are essential for your business and communicate this to your supplier. Are there any materials that are vital for ensuring there are no stoppages in the production process? Are there any products your clients need first and foremost? Mark these items and let your supplier know. By prioritizing key components, you ensure that your operations won’t come to a halt while waiting for less important items.

Communicate expectations

Clear communication with your supplier is essential for managing partial shipments smoothly. From the start, set clear expectations about delivery schedules, the priority of certain items, and the maximum acceptable delays for the remaining parts of the order. Keep an open line of communication to quickly resolve any issues that might arise with delayed or incomplete shipments. Make sure the supplier understands which items are critical and which can be delivered later, and request updates or tracking numbers for every shipment.

Additionally, if your production process depends on specific lead times, make sure your supplier is aware of this so they can coordinate the shipments accordingly. Miscommunication in this phase can result in delayed or incomplete deliveries that disrupt your business processes.

Plan for extra costs

Partial shipments often come with additional shipping costs, which can increase overall procurement expenses. It’s important to be prepared for these additional costs, which may include handling, transportation, and administrative expenses for processing multiple shipments.

To avoid surprises, always request a breakdown of potential extra costs from your supplier in advance. You may also want to negotiate these fees as part of your contract, particularly if you expect to receive partial shipments regularly. Having a budget in place for these extra costs will help you avoid unexpected financial strain.

In addition, partial shipments can increase packaging costs such as increasing the amount of paper, labels, pallets, and shrink wrap used.

Use an ERP system with partial shipment functionality

Leveraging an ERP system, such as MRPeasy, with built-in partial shipment functionality can simplify the management of multiple deliveries. This type of software allows you to track every shipment in real time, ensuring that your team is fully aware of what has been received and what is still pending.

Here’s how you can use MRPeasy to manage partial shipments:

• Create a purchase order with the full list of items you’ve ordered. If the supplier cannot fulfill the entire order at once, you can report partial deliveries that are also recorded in the PO.
• Update stock levels as partial shipments arrive. MRPeasy automatically updates the stock of received items while keeping the order open for the rest of the shipment. This ensures that your inventory reflects the actual stock on hand.
• Track order fulfillment progress. With each reported receipt of goods, the system updates automatically, splitting the PO until the full order is complete. This ensures that your team has a clear view of the remaining items.
• Document control and invoicing. MRPeasy can record separate invoices for the received items, keeping your accounting accurate and synchronized with physical deliveries.

By using an ERP that supports partial shipments, you can manage complex orders with ease, keep track of delivery timelines, and reduce the chances of errors or missed shipments.

Managing partial shipments as a supplier

Managing partial shipments efficiently as a supplier requires a proactive approach to meeting customer expectations while optimizing internal processes. Here’s how to manage partial shipments effectively:

Prioritize by customer needs

When handling partial shipments, it’s critical to prioritize based on what your customer needs most urgently. Start by identifying the products that are essential for their business operations or production processes. These are typically items that, if delayed, could cause a stoppage on the customer’s side.

For example, if you are supplying a manufacturing customer, they may require certain components to continue their production line. These should be prioritized for shipment, even if other less critical items are not ready to go out. By focusing on the high-priority items first, you enhance customer satisfaction and ensure that your partial shipments are adding the most value.

Make sure to discuss and clarify the customer’s priorities before processing the order, and adjust your logistics and fulfillment processes accordingly.

Communicate effectively

Effective communication is essential to avoid confusion and ensure that the customer knows exactly what to expect from each partial shipment. From the moment the order is placed, inform the customer about the potential for multiple shipments, and provide detailed information on what will be included in each batch.

Once the partial shipments are in transit, provide real-time updates through tracking numbers, estimated delivery dates, and progress reports. This transparency helps manage customer expectations and minimizes frustration. If there are delays or changes in the delivery schedule, make sure these are communicated promptly to avoid any negative surprises.

Good communication also extends to internal teams—ensure your warehouse, logistics, and customer support teams are aligned on the schedule and contents of each partial shipment. This reduces errors and ensures a smooth process.

Ensure accurate billing

Handling partial shipments can complicate the billing process. It’s important to ensure that your invoicing is accurate and reflects only what has been shipped. Misaligned billing can result in customer dissatisfaction or even disputes, which can damage relationships.

Here’s how to maintain accurate billing for partial shipments:

• Invoice per shipment. If your customer prefers, send invoices for each partial shipment rather than waiting for the entire order to be fulfilled. Make sure these invoices match the items delivered and include any agreed-upon shipping or handling fees.
• Provide consolidated invoices. For customers who prefer fewer invoices, offer the option of consolidated billing once all parts of the order are fulfilled. This helps streamline the customer’s accounting processes.
• Use clear documentation. Ensure that all shipments are documented with packing lists and clear details of the items shipped, the quantities, and any additional costs.

By carefully managing the invoicing process, you can avoid any discrepancies or billing issues, maintaining a good financial relationship with your customer.

Use an ERP system with partial shipment functionality

Using an ERP system like MRPeasy with partial shipment functionality is crucial for effectively managing orders that you deliver in parts. This type of software allows you to monitor order fulfillment progress, track inventory, and ensure accurate customer communication, all while maintaining full visibility over your stock and shipping processes.

Here’s how MRPeasy can assist in managing partial shipments:

• Track customer order progress. The color-coded order status monitoring in MRPeasy makes tracking order progress easy. You can monitor exactly what has been shipped and what remains to be fulfilled by just clicking on the customer order, and easily create new partial shipments. This visibility is valuable for both your team and your customers when they ask for updates.
• Inventory control. The system ensures your inventory is accurately reflected with each partial shipment. As items are booked and shipped, stock levels are updated automatically, preventing stockouts or excess inventory.
• Billing integration. MRPeasy helps with generating invoices for each partial shipment, ensuring that your billing matches the delivery status of each order. This minimizes the risk of invoicing errors and ensures a smooth financial process.

By utilizing ERP tools like MRPeasy, you can simplify the management of partial shipments and provide a better experience for your customers.

Key takeaways

• Partial shipments involve delivering single orders in multiple batches. This practice can occur due to stock shortages, damaged items, or specific agreements and helps customers receive critical items earlier.
• Advantages for customers include faster access to essential items, reduced production stoppages, and less strain on warehouse space.
• For suppliers, the benefits of partial shipments include leaner inventory management, reduced delays, and improved customer satisfaction.
• Disadvantages for customers include increased management complexity, higher administrative costs, and the risk of stockouts.
• For suppliers, the downsides include higher operational costs, logistical complexity, and potential reputation risk.
• Customers should prioritize critical items, communicate clear expectations with suppliers, and use ERP systems to track shipments efficiently.
• Suppliers should focus on customer priorities, maintain transparent communication, and use ERP systems for inventory control and accurate billing.

Frequently asked questions

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