Managing contract delivery schedules, changes and liability in the supply chain

By Mark Zetter

Supply chain contract delivery schedules, schedule changes, and liability can be points of contention between the contract manufacturer and the OEM.

Both parties want to limit liability as best as possible.

While all manufactured products delivered to the OEM are under terms contract in an agreement, there are times when supply chain schedules under contract need to be changed to meet demand in order to make all parties successful.

Typically, what many OEMs are presented with from their contract manufacturing partners, with regards to supply chain contract scheduling and schedule changes, allows for schedule changes to occur but there is a limit to the degree of change in manufactured product volumes delivered.

All of this is always under the condition of an accepted purchase order where OEM customers may:

  • increase the quantity of products manufactured, or
  • reschedule the quantity of products manufactured and their manufactured product scheduled shipment date

A matrix to address contracted scheduling changes may look something like the following where values can be negotiated to meet business needs of both parties.

In most cases, it is reasonable to assume any decrease in schedule changes can be considered a cancellation.

Contract manufactures may not be inclined to apply cancellation charges when the decreased quantity is rescheduled for delivery at a later date.

 



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