No distribution business ships every order complete every time. Products go out of stock, supplier deliveries run short, warehouse inventory counts have discrepancies, and sometimes the pick team simply misses an item. How you handle the gap between what was ordered and what was shipped determines whether a short ship becomes a minor inconvenience or a relationship-damaging event. The accounts that stay with you through inventory problems are the ones whose distributor handled it proactively, transparently, and with minimal friction to resolve.
The Phone-and-Email Short Ship Nightmare
In a traditional distribution operation, a short ship is discovered at one of three points: when the warehouse picker pulls the order and the stock isn't there, when the driver realizes at the stop that something is missing, or when the account calls after receiving an incomplete delivery. Each discovery point is worse than the previous one — the earliest you know, the more options you have.
When the account finds out first, the damage is already done: they received less than they ordered, they may have already planned their operations around having that product, and they're now calling your team to find out what happened and what you're going to do about it. In a phone-based system, resolving this requires someone to pull the original order, confirm what was actually shipped, issue a credit memo, and schedule either a supplemental delivery or a credit — multiple steps, multiple people, multiple days.
Proactive Short Ship Communication
The standard that turns a potentially negative experience into a manageable one: the account hears about the short ship from you before they receive the delivery, not after. This means catching the shortage at pick time and communicating immediately.
The communication should include: which specific item is short or unavailable, why (brief explanation — out of stock, supplier delay, pick error), what you're doing about it (credit being issued, back-order when stock arrives, substitution available), and what action you need from them if any (approve substitution, confirm back-order).
An automated notification sent at the time the pick discrepancy is logged — "We identified a shortage on your order #1234. [Item X] is currently out of stock. A credit of $[amount] has been applied to your account, and we expect to have this item available by [date]. We can ship it on your next regular delivery or as a supplemental order — reply to confirm." — is far better than a call from the driver at the loading dock.
Substitution Policy
A substitution policy defines when and how you can substitute an alternative product for an out-of-stock item without requiring explicit account approval. The key principle: never substitute without some form of account awareness, even if you're not requiring active approval for every substitution.
A workable tiered substitution policy:
- Auto-approved substitution: Same product, different pack size or format (e.g., a 6-pack in place of individual units, same brand). Notify the account but don't require approval. Adjust price accordingly.
- Approval-required substitution: Different brand, comparable product. Send a notification with the proposed substitute and give the account 2-4 hours to approve or decline before the order ships. If no response, hold the line item rather than substitute without approval.
- No substitution: Some items are non-substitutable by policy — branded items under exclusive accounts, items with specific regulatory or allergen requirements, items the account has flagged as "no sub" in their profile.
Credit Issuance for Short Ships
Credits for short-shipped items should be issued automatically and immediately — not waiting for the account to call and ask, not requiring manager approval for standard short ship credits, not sitting in an approval queue. An account that receives a partial delivery should see a corresponding credit on their account the same day, reducing their invoice by the exact amount of the missing product.
The credit should reference: the original order number, the specific line item that was shorted, the quantity, and the credit amount. The account should receive a notification confirming the credit was applied. Transparent, immediate, no ambiguity.
For recurring short ships on the same SKU — the same product going out of stock repeatedly — the credit process is a band-aid on an inventory problem. If an item consistently short-ships, it needs a higher reorder point, a backup supplier, or to be removed from your active catalog until supply is reliable.
How a B2B Portal Changes the Short Ship Experience
A B2B portal with inventory integration changes the short ship problem at the root rather than the resolution stage. When inventory data is accurate and current in the portal:
- Accounts see actual available quantity when they place the order — they can't order 50 units of something you have 20 of without knowing it
- Out-of-stock items are clearly marked in the catalog with expected restock dates where available
- Back-order options are visible at the time of ordering — the account can choose to back-order rather than skip
- When a short ship does occur, the portal automatically adjusts the order, generates the credit memo, and notifies the account — no manual intervention
The result: fewer short ships (because accounts are ordering against real availability data), and shorter resolution cycles when short ships do occur (automated credit and notification rather than a phone tree). The accounts that are most frustrated by short ships in manual operations are often the same accounts who are most satisfied after moving to a portal — because the transparency eliminates the uncertainty that makes stockouts so aggravating.