It would be unimaginable for a company not to track sales and cash flow, and it should be similarly impossible for a manufacturing or distribution company not to control OTIF. Why is OTIF such an important factor? Well, it is because OTIF goes a much longer way than just being a metric for your company. How? Let’s have a look.
What does OTIF stand for and what does it offer?
When reviewing the success of your supply chain, delivery on time, in full (OTIF) is a critical metric. It simply refers to the number of orders which were delivered successfully, with the exact quantity of the required items, on the day that the client requested them. The primary aim is to provide your clients with the items they require when they require them, and in the amount they request. OTIF assesses your company's progress in meeting this goal and finds fulfillment issues and supplier dependability.
OTIF is calculated by taking the percentage of orders you have delivered in full out of the total number of orders delivered.
You may use this to assess your own or your suppliers' performance. If you are evaluating your suppliers, you may be interested in learning about the providers that are usually late with stock deliveries. Or determining whether vendors are delivering your purchase on schedule but not in the amount you requested. Using OTIF to verify those lead times guarantees that when it comes time to renew your contract, you are fully informed about supplier performance across all of your goods. If you're a distributor, you may calculate your OTIF and utilize it to showcase your company's superior service.
Why OTIF is important
In the initial adaption of OTIF, a shared understanding of supply-chain performance can help consumer goods supply chains in three different ways. First, by harmonizing service standards, business partners will have greater confidence in defining and sticking to service levels. Second, it will enable collaborative performance management, providing trade partners with a shared view of performance versus objectives and assisting them in proactively collaborating to fix issues that jeopardize delivery performance. Finally, it will allow for performance benchmarking, enabling the creation of benchmarks that will allow for industry-wide comparisons.
- Customer Satisfaction: To keep customers, logistics teams must stay on track. This implies they'll inspect their suppliers to guarantee they satisfy delivery deadlines. This also applies to client delivery timeframes, since the OTIF KPI measure may identify how many deliveries are done completely. This is strongly tied to customer satisfaction.
- Maintaining transparency: The OTIF KPI encourages businesses to remain consistent in their output. Platforms enabling real-time visibility have proven to be important in ensuring consistency. From the origin to the finish of the supply chain, these platforms maintain the process’ visibility. They also assist logistics teams in determining where delays create OTIF difficulties. A high OTIF KPI can also indicate timely replenishment- your product is on the shelf when customers come to buy it. This also flows to process efficiency because the customer expects the delivery, and the time spent unloading cars is reduced.
- Creating a global benchmark: Products rarely preserve their exclusivity in a competitive market, with competitors popping up everywhere – both locally and globally. It is critical to retain both a competitive edge and consumer happiness by being present in stores without incurring excessive logistical expenses. OTIF is one of the key indicators of your competitive advance in the global market, and it is also a very reliable benchmark for any industry in and out of the operating country for a company.
How to Balance the components of OTIF
Because there is no industry standard, one option to enhance OTIF is to develop internal standards. Organizations may enhance their bottom line by combining real-time visibility, responsibility, and engagement with the supply chain.
- Balancing Transit and Other Factors: OTIF is frequently seen as a last-mile problem. In other words, low OTIF is frequently blamed on transportation; nevertheless, reconsidering lead times can greatly improve OTIF. Suppliers may miss challenges at other levels of the supply chain if they just focus on transit as an OTIF concern.
- Getting into the roots: Understanding the root reasons for bad OTIF might help you avoid overbuying and paying late-delivery fines. It also aids receivers in avoiding overpayment of bills that may not correspond to final purchase orders.
- Utilizing 3PL: Third-party logistics (3PL) businesses can also assist shippers in improving their OTIF. A 3PL will understand the intricacies of major retailers' routing guidelines and will be able to assist businesses in identifying difficulties in their supply chain. In the end, this means that shippers, carriers, and merchants are pleased—and that low OTIF consequences are avoided.
The Challenges of OTIF
Logistics suppliers have significant obstacles when it comes to delivering goods on time and in full. One of the most difficult problems is organizing and analyzing data from their network interface. To compute an appropriate score, the data must be integrated and evaluated for quality and consistency. The adoption of technological platforms is critical for solving this problem.
The technological platform that can aid you with the challenges that are to come, is Nuport. Nuport can accurately analyze and hand over delivery data to you- the one in control, in time that can help you maintain the OTIF standards. Time management and accurate intake of data, the two most important aspects of OTIF, are fully covered by our industry-leading delivery management system. With Nuport, your OTIF KPI is surely going to see the rise that it might need. Schedule a demo today!