Undersupplier

An undersupplier is a supplier whose performance falls short of the required quantity, quality, or timing defined in a contract or forecast, resulting in a gap between supply and demand. The term is used in procurement and supply chain management to describe chronic underdelivery or underperformance by a supplier, rather than a one-off delay. Undersuppliers can fail in several dimensions: quantity (unable to supply the agreed volume), quality (not meeting specifications leading to rejects), and delivery (late shipments or incorrect items).

Causes include limited capacity, poor planning, raw material shortages, equipment failure, quality control problems, logistics bottlenecks, or financial distress. Consequences include stockouts, production stoppages, higher expedited transport costs, increased safety stock, and disruption of downstream operations. Risk indicators include low forecast accuracy, high lead-time variability, low fill rates, and frequent nonconformances.

Management approaches: assess supplier risk, diversify sources (dual or multiple sourcing), implement collaborative planning, establish service-level agreements with penalties or incentives, invest in supplier development, implement vendor-managed inventory or early-warning systems, and maintain contingency plans with buffer stock or strategic reserves. Common metrics to monitor performance include OTIF (on-time in-full), fill rate, and defect rate, which help trigger corrective action.

Undersupplier is part of broader supply-chain risk management and supplier performance management. It highlights the importance of capacity planning, supplier relationships, and resilience in procurement strategy.