Shortage Management

Case Study:

Shortage Management

Executive reviewing shortage management dashboard showing component shortages, overdue orders and inventory overload – Nextshift Leadership consulting during semiconductor crisis

Initial Situation

  • Severe shortages of key components due to the global semiconductor crisis
  • Overloaded customer order backlog: >70% of orders requested for short-term delivery with no realistic planning basis
  • Rapid rise in overdue customer backlogs – risk of unfulfillable delivery commitments
  • Inventory increase due to customer pushouts & cancellations on standard parts, despite critical shortages – due to missing key components and production stops on customer side
  • Unreliable customer forecasts; risk of duplicate or inflated orders
  • Cash flow pressure from growing inventory levels and declining turnover
"Team reviewing supply chain dashboard with heat map during shortage management meeting – Nextshift Leadership consulting on backlog screening and escalation framework

Actions & Approach

Shortage Management & Escalation Framework

1. Backlog & Forecast Screening

  • Systematic assessment and prioritization of open customer orders by likelihood of fulfillment
  • Close coordination with customers to eliminate phantom demand and duplicates
  • Clear communication of “No Cancel / No Reschedule” (NCNR) supplier terms

2. Shortage Steering & Escalation Process

  • Established a dedicated “Shortage Board” with daily task force coordination
  • Leveraged global supplier contacts to redirect critical allocations
  • Structured evaluation of lead times, confirmed quantities, and supplier responsiveness

3. KPI-Based Management & Early Warning Systems

  • Developed and launched a backlog dashboard with heat map logic
  • Integrated metrics: On-Time Delivery, Purchase order backlog status, Customer requested vs confirmed date ratios
  • Defined escalation levels: regional / central / strategic

4. Tight Collaboration with Sales & Customers

  • Weekly joint risk reviews with key customers
  • Regular analysis of inventory KPIs: turn, aging, unallocated stock
  • Introduced a “Demand Transparency Framework” to improve forecast reliability

Results & Impact

  • Reduced purchase order backlog by >35% within 4 months
  • Improved availability for prioritized components (Top 50)
  • Restored transparency and credibility with both customers and suppliers
  • Established a lasting early warning system for inventory and supply health
  • Defined a scalable escalation process for future allocation phases
Executive team reviewing results of shortage management project – 35% purchase order backlog reduction and improved supply chain health KPIs
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