My OEM Supplier Rating Dropped: What Schedule Adherence Really Costs in Business

Your customer downgraded your supplier rating for late or short deliveries. What does it cost? As of 17 Oct 2026, published supplier manuals used in India link the delivery score to share of business and new-business holds. On an assumed ₹20 crore account, a 10% share cut removes about ₹44 lakh of contribution a year, before any lost RFQ.

By the Mama Editorial Team. We scope camera and floor-visibility projects for Indian factories. Last checked: 20 Oct 2026. Every ₹ figure in the worked example is a labelled assumption unless a source is linked in the same sentence.

This piece is about delivery: late, short and premium-freight shipments. If your trouble is bad parts reaching the customer's line, the bill looks different; see what a PPM escalation costs.

Key takeaways

• Your customer is required to watch your delivery. IATF 16949 clause 8.4.2.4 lists "delivery schedule performance" as a minimum supplier indicator, per IATF's own published text of the clause (Sanctioned Interpretations, November 2025).
• Scoring is harsher than it looks. In CEAT's manual, one stock-out in a month cuts the delivery rating by 50%. In NEIL's formula, every piece short lowers the score and each premium-freight incident takes off another 2%.
• The rating moves money in steps. NEIL (NBC Bearings) publishes a procedure in which a poor performer loses 25% share of business to a new supplier, then can be tapered to zero over four months.
• The next RFQ is the bigger loss. Tenneco India's manual names "new-business hold" for suppliers who miss its scorecard expectations, and MANN+HUMMEL's lists "Immediate NBoH status" at its highest escalation level.
• The fix is usually cheap next to the loss. In the worked example, two days of safety stock costs about ₹1 lakh a year in interest, against roughly ₹55 lakh a year of lost contribution and freight.

What the standard actually says about delivery

IATF 16949 is the automotive quality-system standard. IATF publishes clause 8.4.2.4 "Supplier monitoring" word for word in its Sanctioned Interpretations (IATF 16949 SIs, November 2025).

The clause says: "The organization shall have a documented process and criteria to evaluate supplier performance." It then lists the minimum indicators: "a) delivered product conformity to requirements; b) customer disruptions at the receiving plant, including yard holds and stop ships; c) delivery schedule performance."

That obligation sits with your customer, not with you. The clause says "shall", so a certified Tier-1 or OEM has to track your delivery schedule performance as part of its own certified system.

Premium freight used to be item d) of the same list. IATF's Sanctioned Interpretation 19, issued in August 2020 and effective October 2020, struck it out, giving the reason that "premium freight is already included as part of the Customer Satisfaction requirement defined in 9.1.2.1" (IATF SIs, November 2025).

Clause 9.1.2.1 is the customer-satisfaction requirement your Tier-1 must meet towards its own customer. So when your late lot forces your Tier-1 into an express shipment to the vehicle plant, that premium freight counts against the Tier-1 too. A slip that looks small from your side is a mark on two scorecards.

The standard sets no pass mark. In IATF's published clause text, no numerical on-time target is given (checked 17 Oct 2026); the threshold comes from each customer's manual.

How published supplier manuals score delivery

Every customer writes its own formula; these public ones show the range.

Sources, read 17 Oct 2026: NEIL, CEAT, MANN+HUMMEL, Tenneco India.

Delivery can be graded on its own. NEIL's annexure classifies suppliers A, B or C on the delivery rating alone, separately from the combined score, per the NEIL manual.

Late and short are both misses. MANN+HUMMEL scores quantity and date as separate inputs, with backorders as a third, so a truck that arrives on time but short still loses points. NEIL's formula works the same way from the other side: every piece not received comes straight off the percentage.

Premium freight is both a cost and a score. NEIL deducts 2% from the delivery rating for each premium-freight incident. MANN+HUMMEL's charge-back clause lists "Additional freight charges" among the costs a supplier accepts when its parts are non-conforming, per its Global Supplier Manual.

Delivery and quality land in one grade. MANN+HUMMEL's Global Supplier Manual (MHG-PU-M-0008, Rev. 2, July 2025) scores logistics on "Quantity, Date, Backorders" and deviations from vendor-managed inventory, in line with VDA 9003, then sums logistics and quality scores into an A, AB, B or C grade, reported monthly with a 12-month rolling average (MANN+HUMMEL Global Supplier Manual).

A worked delivery score. Assume your customer uses NEIL's formula and scheduled 40,000 parts last month. You delivered 36,400 and sent two express trucks. Delivery Performance Rating is 36,400 ÷ 40,000 = 91%, minus 2 × 2% = 87%. That is a B. One more short week and you are below 85%, a C.

From rating to share of business

A rating is a monthly number; share of business (SOB) is the money.

NEIL's "Supplier Termination Policy" says that if an alternate supplier with spare capacity exists, the customer will "reduce SOB with existing supplier and give 25% SOB to new supplier in 2nd month if no improvement seen in 1 month." If the existing supplier deteriorates in months two and three, "SOB should be tapered down to Zero in 4 months," per the NEIL manual.

NEIL also audits A suppliers once a year, B twice and C three times, but that cadence follows the previous financial year's Supplier Quality Rating, not delivery.

From share of business to the next RFQ

The share you lose is visible; the RFQ you are not invited to is not.

Tenneco India's scorecard covers quality, delivery, service and cost, and suppliers who miss its expectations face "new-business hold or further actions"; its IMDS section adds that non-compliance "will be reflected in the supplier's rating and can affect future business invites / nomination" (Tenneco India manual).

MANN+HUMMEL's manual says the supplier evaluation "has a direct impact on the business relationship", and the consequences it lists for its highest escalation level, Q-Focus, begin with "Immediate NBoH status", new business on hold, and include "Shift of %-volume at a certain date". Q-Focus typically follows a persistent quality issue, not a delivery one, but the hold works the same way: while it lasts, new parts go elsewhere (MANN+HUMMEL Global Supplier Manual).

If a nominated part runs for several years (the worked example below assumes five), the missed RFQ can cost more than the lost share. Whether you can take new volume at all is a separate check; see an OEM RFQ lands: can your shop take the volume.

The ₹ cost of a rating drop: worked example

Every figure below is an illustrative assumption; replace each with your own.

• Assume one customer account worth ₹20 crore a year.
• Assume a contribution margin of 22% (price minus material, power, consumables, variable labour). Rent, salaries and EMIs stay when volume goes.
• Assume the customer moves 10% of your share to a second source after two poor delivery months.
• Assume you also self-fund three express trips a month at ₹30,000 each to protect the remaining share.
• Assume a new-model RFQ worth ₹5 crore a year for five years goes to someone else because you are on hold.

Now the cost of the usual fix. Assume 300 working days a year, so the account ships about ₹6.7 lakh a day at selling price, or about ₹5.2 lakh at cost (78%). Two days of finished-goods safety stock ties up about ₹10.4 lakh. At an assumed 10% interest on your working-capital limit, that is about ₹1.04 lakh a year.

₹1 lakh of interest against ₹55 lakh of lost contribution and freight is the decision. Buffer stock does not fix a bottleneck; it buys time to fix it. Run your own numbers on the late order cost calculator.

Why deliveries slip in a mid-size plant

• A bottleneck machine or press loses an hour a shift; the shortfall reaches dispatch days later.
• Finished goods wait at packing or inspection while the truck waits outside.
• A sub-supplier ships short, and your customer's receipt still records the shortfall against you.
• The truck leaves your gate on time, but the customer counts arrival at its own gate.

The floor side of this, catching the bottleneck before the ship date is spent, is covered in why your shipments slip.

What cameras can show, and what they cannot

A camera cannot read your customer's schedule, your ERP or the customer's gate log. The rating comes from the customer's receipts.

Customer auditors look at the same floor. Our piece on cameras for IATF and OEM audits covers what they check. Keep any camera output at machine and station level. Footage of recognisable workers is personal data under s.2(t) of the DPDP Act, 2023; tell workers in writing what is recorded and why (see the worker CCTV notice under DPDP).

Where Mama fits

Mama reads the cameras a plant already has over RTSP/ONVIF, or a few added ones, and every morning sends the owner a short plain-language note on where hours went yesterday: the bottleneck machine that stood idle, finished goods that waited at packing, the dock that sat empty during the dispatch window. It watches machines and flows, counts people only in aggregate, and never ranks operators. It does not see your customer's scorecard; it shows the floor causes behind it. Mama can draw a camera plan for the bottleneck, packing and dispatch points. Leave an email or phone in the form below.

FAQ

Does IATF 16949 require my customer to track my delivery performance? Yes, if your customer is IATF 16949 certified. Clause 8.4.2.4, as published by IATF in its Sanctioned Interpretations (November 2025), lists "delivery schedule performance" among the minimum supplier indicators. The standard sets no target figure; your customer's manual does.

Why does one short delivery hurt my rating so much? Many formulas score quantity and date separately, so a short lot loses points even when it arrives on time. In NEIL's published method, each premium-freight incident takes another 2% off. CEAT's manual cuts the monthly delivery rating by 50% for one stock-out.

Can my customer move business to another supplier because of delivery? Published manuals describe exactly that. NEIL's policy moves 25% share of business to a new supplier if there is no improvement in a month, and can taper the existing supplier to zero over four months. Your own contract and manual decide what applies to you.

What is New Business Hold? A status in which the customer does not award you new parts. Tenneco India's manual names "new-business hold" for suppliers who miss its scorecard expectations, and MANN+HUMMEL's lists "Immediate NBoH status" among the consequences at its highest escalation level.

How much does a rating drop cost in rupees? In our illustrative example, a 10% share cut on an assumed ₹20 crore account at 22% contribution costs ₹44 lakh a year, plus ₹10.8 lakh of self-paid freight, before any missed RFQ.