What can you do about late shipping?

Here is a question (and the answer, bonus!) from the GS show presentation that I thought would be valuable to anyone that is working in China.“What do you do about late shipping?”1.    Contract out dates and penalties before hand.  Certainly get your dates and penalties written down, but also (explicitly) review them with your supplier and get signed confirmation from a manager.2.    Review and confirm the specifics again, with a qualified manager, at another time to ensure that those shipping dates and penalties are indeed agreed to by the factory. Do this more than once.3.    Personally confirm production capacity and times for your product when you visit the factory and do the scheduling math yourself.  If you run the numbers and present them to the factory you will have a valuable discussion into the details of how they figure out production times.4.    Make sure that you get a check list, from the factory, of dates and items that you and they need to hit to ship on time.  Keep those records up-to-date and copy every decision maker in the factory on the on-going history of those items.5.    Physically confirm (on-site) the production check-points and quantities throughout the production process.  What happens when you miss a date or under produce?  Ask the very day you find out, not later on when it may be too late.6.    When it starts to get close and your own numbers are telling you you may be late, bring the issue up as early as possible.  Take the initiative yourself to make things happen on time.  Don’t be worried about face—be polite, but certainly ask—remember, it’s your money, you should get the answers that you want/need.7.    At the point that you know that your supplier will for sure be late, start negotiations immediately to fix the problem, speed up final production or begin compensation options, etc.  Talk only to people that can make decisions—don’t waste your time with sales people.8.    If necessary, involve legal action earlier than later.  Don’t make empty threats, but don’t be afraid to get a lawyer to help you out either.  This assumes that your contracts and PO's are executable in China and all your paperwork and business registration are legal and up to date.9.    Understand that if your orders are small and if you let the production process go until the very end without checking on things yourself, you will almost certainly be left out in the cold.  Unless there is incentive ($) for the factory to serve you, they won’t do it.  If it doesn't seem like it's a priority for you it won't be for them either.10.    In your contracts, make shipping on-time an incentive for your supplier—be fair, be specific and make sure you’re not cutting the legs out from under your negotiations by making the penalties overly punitive.11.    Worst-case scenario: get what you can, when you can and call it good.  To do this and not lose your shirt you have to plan ahead—and I would do this no matter what.  Give yourself a couple of extra weeks (without telling your supplier) to ship for the “just in case” that will almost certainly happen.  This means you get what you want, that’s the plus side.  It also means that you won’t be able to hold your supplier to tight dates on the next order since he knows you’re padding your schedule.12.    Finally, things not to do.  Mike Bellamy of Passage Maker USA says that asking for your deposit back is like saying: “We’re done with you.  We’re moving on and we don’t even want the product you’ve already produced either.”  In other words, it’s a death nail in your relationship coffin.  At this point the factory has no incentive to work with you to resolve concerns.  Don’t play your biggest card up-front leaving you with no negotiation tools later on.More goodies tomorrow!