Undershipment

Undershipment is the delivery of a shipment with fewer units or items than were ordered or billed, resulting in a short shipment. It occurs when the actual quantity received by the customer falls short of the quantity specified in the purchase order, invoice, or bill of lading. Undershipment can occur for any part of a shipment and may involve one line item or multiple items.

Common causes include stockouts or partial fulfillment by the supplier, mis-picks or packing errors, backordered items not included in the initial shipment, routing or labeling mistakes, and documentation discrepancies that lead to incorrect quantities being released. It can also arise from intentional partial shipments to manage inventory or production constraints, or from damage or loss that is not reflected in the shipment documentation.

Metrics used to assess undershipment include fill rate, line-fill rate, and shipment accuracy. Reporting typically tracks the extent of short shipments, the items affected, and the financial impact on both supplier and customer. Effects can include inventory mismatches, production delays, increased administrative work, and potential disputes or credit requests under service level agreements.

Resolution and prevention focus on timely communication, backorder management, and root-cause analysis. Remedies may involve reshipment of missing items, issuing credits or refunds, or arranging alternative fulfillment. Preventive measures include improving demand forecasting, enhancing inventory control and picking accuracy, implementing advanced ship notices, better supplier collaboration, and performance measurement programs to reduce the incidence of undershipment over time.