Here’s a question from a retailer requesting your opinion on cancellation dates.
I own a small boutique and it seems like most of our orders are being shipped late this season. I want to cancel some items, but am worried about damaging my relationship with my designers. I was hoping to gain some perspective on this issue from the designer’s side.
If an order ships after the cancel date, when is it understandable to cancel, and when is it not? For example, is it unreasonable to cancel one day after the cancel date? How about one week after the cancel date?
Thank you in advance to anyone who can provide feedback!
I never lack an opinion but what’s yours?
Speaking as a young independent manufacturer I hate when store do this. The contract is there and cancellations take a toll on us. My best advice is to call them and work something else or still pay the full amount and take a credit for next season for the items not wanted.
Not that I’m an expert, but I think if you as the designer or manufacturer of the goods can’t ship for whatever reason until after the cancellation date, you should work with the store. While it is at the very least annoying to receive a cancellation, if you’re the one shipping too late, why wouldn’t you extend the date? If the store is asking for a cancellation way later than that, I don’t think you should.
Most sales agreements state that the order is canceled if not shipped by the cancel date (or if not in store by the in store date if that is how it was written). So if the goods are late, the store is not obligated to “work something out” with the designer or take all the goods. This is at their discretion. Which is why I would say that, as a retailer, if you do take a late order, make it known because reps and DEs rarely appreciate it when they are extended that courtesy but complain when they aren’t.
It is really up to you how you want to handle it. I think being antsy over a day late is ot conducive to good business relationships. But when you run into a week or more, then they are messing with your open to buy and your merchandising. Thus, if you’ve written yourself into orders for goods that you are now uncertain about, you have an “out” for renegotiating that order or not taking it at all.
Because, if they don’t ship by the cancel date, you don’t have to accept the goods. Well run companies would contact you and ask if it is okay to ship past the cancel date (some will even ask you to sign an extension if you want the merchandise). So at some point you need to decide what road you want to take.
So to DEs that feel cancellations take a toll, ship on time. Retail is about moving merchandise and no one can move what is not even in the store. Not to mention, you’ve tied up open to buy dollars and when you’re late, that retailer can’t release their money to buy other items unless the order is canceled.
It is a two way street. Having a “hard time” as a DE doesn’t give doesn’t mean your woes should spill over to become your customers’ problems. Just as much as retailers shouldn’t take advantage of DEs to build their business.
I’ll sum this up by saying: Don’t let people sway you by what is good or not good for them. You have a business to run just as they do. Both parties need to act in the best interest of their own business.
I agree with Miracle. As a manufacturer it is up to you to get your goods shipped on time and once you miss that date your contract becomes null and void. However there are ways to soften up your stores such as offering free shipping or 15-30 day terms. But if a store wants to cancel an order, they have every right to.
Now, with that said, one or two days late is pretty harsh to cancel an order. It will probably piss off that manufacturer, so as a retailer you have to decide if it is worth it. If I were a store and a manufacturer was late I would figure out what would be my ideal shipping terms and what would be my cancelling point and then negotiate between those two variable for a compromise with the manufacturer. That way both of you decide what is ‘fair’ and you both win.
I understand it can be frustrating to get an order canceled, but it all fairness, if your order is canceled because you didn’t comply with the delivery dates, its your fault, not the stores. It is the manufacturer’s responsibility to be organized enough to not be late. If there is a problem, something happened that is out of your control, that leads to a late delivery, call the store first and let them know, keep communication open, don’t just ship an order late an expect for them to have to take it. I see it as part of the golden rule. As a manufacturer, I want to get paid on time, so I ship on time. The store gives me a shipping date, and I comply, I give them a time frame to pay, I hope they comply.
Your orders are a legal contract, as a buyer it is your job to keep your OTB updated and not cancel orders. You will be backed balled…trust me it’s not only the vendor that you had to cancel with but with everyone else they know. Even at a tradeshow I’ve seen sales people point out a buyer that cancels and now (the buyer) wants to know why they have to put down a deposit or worst no one wants to sell them. My feeling is the order is witten “cancel” not xwarehouse or in store date….so I like to give them 2 or 3 days….if they call me before it’s late (very important you guys!!!) I might cut them a break. But the rule is if you don’t call me 3 days and then I cancel or if I need the goods…I might ask for a discount or free frt. I think it’s important to build relationships and learn to work with each other. I remember after the Spring floods this one a store (which was washed away!!!) tried to cancel some orders and a FEW designers told her no! Now she is selling goods from her back room. That’s not cool.
Yes, orders are theoretically a legal contract and when I mfg’d I always busted my balls to make sure I never shipped late- but, when I did feel I needed extra time I always requested it well in advance of the ship by date and so avoided running into this gray area, so I think you’ll always get it by asking, provided it is not unreasonable.
Unfortunately, a lot stores didn’t like to treat their end like a “contract” when signing terms. So I switched to pre-pay and COD for all but select accounts & wound up selling mostly overseas, which it turned out was my ideal customer base-it also cleared out the chafe from the get-go. Funny how these things work out!
As retailers we try to work with our vendors. We don’t cancel if the merchandise is a few days late. If merchandise a few weeks late or more, we have to make a choice. If we know we can sell it, we take the merchandise. If we are unsure we ask for a discount, and if they give us the discount we will except the merchandise. If we are sure we can not sell it, we do not except it.
When we are buying, we make our decisions on delivery dates. we don’t buy many items we like because we can not sell it for that delivery. We do not like to cancel, however; we do not feel bad if we have to cancel. It is a financial decision.
That said, I would like to know about the DE’s end, what happens when the manufacturer is late getting the product to the DE’s? Do you get discount when items are late? If you know certain items are going to be late can you produce less quantity to compensate for cancellations?
Just wondering, I would like to hear from the other side.
In the book I see that I underlined pretty heavy pages 86-87, where the boutique owner talked about these problems.
Considering my newness here- If a date of shipping has been approved by both parties and the DE cannot ship by that date wouldn’t they know it 2-3 weeks before the date? If we are on top of our project we should know that there is a bottle neck in our project which would push out all of our dates.
I come from a project mgmt. background and tend to work backwards. For me it would mean I need to communicate to everyone on the other side of the bottle neck. The end result is to get product to the boutique so I can get paid. I don’t like the idea of having a grey area of 1-2 days or 1-2 weeks on canceling/shipping or being paid.
@John.
It’s a tough sell. But, I encourage DEs to incorporate incentives and consequences in their contracts with their cut & sew facility. A downside is that most of the behind-the-scenes are done on handshakes.
It does come down to project management. And, the issue, there, is that new DEs are either: a) reluctant to hire a production coordinator, b) don’t know they should hire a production coordinator, c) don’t have the budget to hire a production coordinator, d) make a poor hiring decision.
One of the designers in my stable was a week late shipping one of her products – it had to trail the main boxes. There was a communication problem with the CMT shop regarding that particular product – they didn’t read the specs or refer to the pattern and sew-by sample in production. IOW: what they sewed for quotation did not match what they sewed in production.
I became involved after production (i.e. too late) and tried to broker it so the CMT shop would repair the work to spec. The shop got temperamental, refused to do it – leaving it to her and me to figure out. She and a handful of friends fixed the defective merchandise.
She opted to not pursue redress because that shop was working on another job for her. But, this shop was spiteful and sabotaged that other job. As a result, this shop is on my short list – and, not the good one!
The second project was promotional banners the brand was giving to their stores. Those could ship late for additional expense to the Mfg if need be. That SNAFU wouldn’t affect the Retailers financially; but, it did affect the ability of the Retailers to do promotions according to plan.
In any event, this designer contacted the Retailers as soon as she came up with a plan to fix the problem. She explained, briefly, that there were production hangups which would affect delivery. She was able to navigate late shipping with negligible financial impact. The banners, however, cannot be delivered, so she is forced to lose that investment and carry more backstock for reorders than she had planned for.
To your question about reducing the cutting ticket. This depends on timing. If the cut & sew facility advises that fabric is delayed or cannot be replaced, then a DE has enough warning to take action on the cutting ticket. The DE can broker with the Retailer the option to reduce their order, let portions of it trail or negotiate a new delivery date. If the cutting ticket is reduced too far, however, the cut & sew minimum may not be achieved, which means the DE needs to go back to the Retailers that are impacted and broker a reasonable resolution.
DEs are most affected by cancellations after the cutting ticket has been draft. This is really the point of no return because the production engine is in full swing. Again, solid project management skills can mitigate the majority of risk. But, a DE needs to be realistic, too. Re-negotiating a deal – regardless the reason – is a luxury. The Retailer is no longer committed if the DE cannot meet the expectations they sold.
Being on the manufacturing side I have a 48 hour cancellation policy. If the manufacturer can not make the dates they promised – then cancel the order. I find it odd that with the economy the way it is that company’s would not be jumping all over themselves (we are) to make the store happy. I would not feel bad about it either – go find a comapany that you CAN count on – there are a lot of us out there that ALWAYS ship on time.
From a manufacturer’s perspective, project management and production coordination are essential to a ensure the DEs success in timely deliveries. The timelines have to be closely monitored throughout the production process and any delays should be communicated early on so the DE can work on setting expectations with the stores on any potential delays.
The DEs are advised to work out terms of rolling deliveries/ship as ready deliveries with the stores within reason (shipment in 2-3 batches max) and 5% tolerance on the delivery dates should be acceptable with prior agreement with the Retailer.