"Waiting on parts used to take weeks, that turned into months, and now the company won’t even commit to a ship date, and that’s assuming I can get them on the phone."
All the changes in the past several years — from supply chain disruptions to tariffs — have had a costly impact on businesses, especially those overly dependent on foreign-produced products. Recently, significant downtime costs have accumulated for those manufacturers relying on overseas deliveries. While shipments are delayed as parts need to be fully tracked (down to the individual ball bearings) to ensure proper tariff allocation, ships wait to clear customs, which causes ports to become congested. When shipments do arrive, they come with a 15–30% higher price tag. This is a sudden financial shock — both in direct and indirect costs — that pose a threat to your business’ profits and can have a severe impact on your company’s viability.
Here are the Top 7 costs as a result of a delivery delay:
- Loss in revenue.Clearly, if you aren’t getting your product out the door to your customer, then you’re not making money, and eventually ongoing failure to meet production targets can put you out of business.
- Unproductive or underproductive employees.Employees standing around idle is a waste of their time while you pay wages for them to do nothing. This adds to your operating expenses while not bringing in revenue.
- Missed deadlines. One slipped deadline could easily have a ripple effect of delaying other scheduled deadlines. In addition to a delay in revenue, or none at all if the customer cancels the order, you could even face financial consequences for breach of contract depending on your agreement.
- Damage to customer relationships.You missing your deadline not only costs you but can also be costing your customers who have deadlines of their own. When customer loyalty erodes, it has a long-lasting impact. 61% of customers are ready to walk away from a brand because of an unpleasant customer service experience (survey by Convince&Convert).
- Lost business opportunities. If you can’t fulfill the orders you have, it’s difficult to justify driving new sales, putting you further away from your revenue goals.
- Damage to your reputation.A dissatisfied customer will tell between 9–15 people about a bad customer service experience (White House Office of Consumer Affairs). That’s twice as many as will talk about a good one. 47% will post a bad review on social media (Convince&Convert).Additionally, missing a deadline is likely to take a toll on your professional and personal pride.
- Overall frustration.If you don’t know when your delivery is going to arrive, you pass on that uncertainty to your customers. You want quick and reliable service, and you want to provide that to your customers.Added to your frustration could be numerous phone calls to people who speak a different language and live in a vastly different time zone, escalating your frustration into rage.
Here is a hypothetical case of the cost of a delivery delay based on cabinetry industry averages:
Labor Costs
| # of Employees affected by downtime | Average employee wage | Duration of outage (in hours) | Average % of lost productivity | Total Labor Cost |
| 18 | $21 | 40 | 75% | $11,340 |
Lost Revenue
| Gross Annual Revenue | Hours per day open for business | Days per year open for business | % of lost business that is irrecoverable (e.g., can't delay order or reschedule jobs) | Total Lost Revenue |
| 2,500,000 | 8 | 249 | 60% | $30,120 |
Totals
| Labor Cost | Lost Revenue | Total Downtime Cost | Hourly Downtime Cost | Average Monthly Cost in Downtime | Average Annual Cost in Downtime |
| $11,340 | $30,120 | $41,460 | $1,036 | $41,460 | $497,525 |
| That’s 20% Down the Drain! |
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