How to agree production overruns and underruns
Agree ordered, minimum and maximum acceptable quantities for each variant, with separate instructions for excess units and shortages. Specify whether quantities within those limits may be packed automatically or still need written release, and approve any invoice adjustment before issue. Use this schedule to brief Cambridge China Bridge.
Define the allowance for each variant
Attach a quantity schedule to the order showing each product code, colour, size, specification revision and destination. Enter the ordered quantity and separate minimum and maximum acceptable quantities for every line. State whether exact quantities are required. Avoid an allowance that applies only to the total order: surplus in a popular colour should not conceal a shortage in another.
Define the counting unit, such as individual pieces, complete sets or saleable packs. If using a percentage allowance, specify its base and rounding method, then record the resulting whole-unit limits before production. Say whether variants may offset each other and how incomplete cartons are handled. Link the schedule to your product specification.
Separate production allowance from delivery approval
Distinguish permission to manufacture extra units from permission to deliver and charge for them. State whether acceptable units within the agreed range may be released automatically or whether the buyer must approve the final quantity. Keep quality acceptance separate: rejected units, unfinished goods and samples should not count towards the accepted delivery unless expressly agreed.
Ask the seller to acknowledge the quantity schedule and remove conflicting wording from its quotation or order confirmation. Agree how later changes will be recorded and who can approve them. Use the guide to purchase orders and supplier terms for the wider document checks.
Agree what happens to surplus and shortages
For excess units, choose the permitted route in advance: purchase them following approval, hold them separately for a later decision, or arrange agreed disposal. Specify who pays for production, storage, handling and disposal, and whether held stock creates any purchase commitment. For branded goods, agree restrictions on resale, donation, use of packaging and removal of branding, with evidence of the agreed outcome.
For an underrun, require the factory to report the shortage by variant and propose a remedy before packing. Decide whether to accept a reduced delivery, request completion or approve a split shipment. Agree the revised payment, timing and extra transport costs before release. Do not allow substitution between variants merely to restore the order total. For sourcing-service updates, see how to agree reporting deadlines.
Create a hold before packing and invoicing
Require a final reconciliation showing ordered quantity, acceptable finished quantity, rejected quantity, proposed packed quantity and surplus held back, by variant. Ask for count records and photographs where useful. Set a hold before final shipment packing and invoice issue until the named buyer approver releases the proposed quantities. Inspection approval alone should not release a quantity change.
Suggested order wording: ‘Report final quantities by variant before shipment packing. Hold packing and invoice issue pending written release from the named buyer approver. Do not offset variants or include excess units without that release. Identify excluded stock separately. Submit any proposed change to quantities, charges or delivery arrangements for approval.’ Name the approver through your order and payment controls.
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Reconcile the released goods and charges
Record the approval date, approver, schedule revision, quantities released and agreed charges. Check the final packing list and invoice against that release, including approved extras supplied without charge. Agree whether an accepted shortage reduces the invoice or leaves a separately recorded outstanding balance of goods. Use the packing list guide for carton and variant identification.
Where the UK seller issues a full VAT invoice, HMRC requires quantity information for each item. Keep that invoice check alongside your commercial approval process. If the packed count changes after approval, hold dispatch and obtain a revised release before updating the documents.
Frequently asked questions
What production overrun allowance should I accept?
Ask the factory to explain its process needs, then set limits against your demand, storage and budget. Record limits by variant and decide whether delivery within them still needs written approval.
Can extra colours make up for missing sizes?
Specify that variants cannot offset each other unless you approve a revised mix. Check each variant against its own minimum and maximum, even when the order total matches.
Do I have to buy all the extra units?
Agree the treatment before production. State whether excess stock requires a separate purchase approval, can be held without a purchase commitment, or follows an agreed disposal route.
When should I approve the final quantity?
Require the final count by variant before shipment packing and invoice issue. Give written release identifying the quantities and charges approved, and request a revised release if the count changes.