As I examine the increased digital complexities of supply chains, I’m more convinced that measuring performance is crucial for success. What’s more, a key metric for achieving supply chain excellence is On-Time In-Full (OTIF). In this article, I’ll share my insights on how best to effectively measure OTIF for your organization. In fact, it is amazing all the things to consider when measuring OTIF. This includes addressing critical questions such as tracking inbound shipments, ecommerce considerations, data availability, and accurate measurement to name a few. By the end of this article, you’ll have the practical advice you need to improve your organization’s supply chain performance using the OTIF metric.

First, What is OTIF?

On-Time In-Full (OTIF) is a supply chain metric that measures the percentage of orders delivered to customers on time and in the correct quantity. It’s a critical indicator of a company’s ability to meet customer expectations and maintain a competitive edge. By tracking OTIF, businesses can identify areas for improvement in their supply chain operations, from order fulfillment to inventory management and shipment delivery. Below is a good working definition of OTIF.

“… measures a supplier’s ability to fulfill its delivery promises, meaning a customer receives exactly what was ordered, in the amount requested, at the correct location, and within the agreed upon timeframe.”

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Without a doubt, On-Time In-Full (OTIF) is an essential barometer of supply chain excellence. Moreover, OTIF reflects how well logistics companies, retailers, and suppliers align their operations with customer expectations. For a more detailed discussion on the mechanics of OTIF, see my article, What is OTIF, How to Calculate, and Why is It Important?

Achieving Supply Chain Excellence with OTIF Metrics: Essential Insights You Need to Know

To achieve supply chain excellence with OTIF metrics, it’s essential to understand the nuances of this metric and its relationship with different supply chain systems and their data interfaces. See below for answers to key questions and insights for effectively measuring OTIF in your supply chain.

1. OTIF vs Inventory Availability: Are They the Same?

OTIF and inventory availability might sound similar, but they track different things. Think of inventory availability as just checking if items are in stock. OTIF goes much further – it measures if those items actually reached your customer when and how they wanted them. Indeed, a warehouse full of products won’t help your OTIF score if trucks arrive late or ship wrong quantities. Plus, OTIF gets tricky when you deal with backorders or partial shipments. At the same time, these situations don’t affect your inventory metrics at all. The bottom line – measuring inventory availability is not a substitute for measuring OTIF and achieving supply chain excellence.

“… measuring inventory availability is not a substitute for measuring OTIF and achieving supply chain excellence.”

2. Is Arriving Early Bad?

Arriving early can be beneficial in some cases, and in other cases, not helpful. It depends on the impact an early delivery has on who is receiving the shipment. While your average consumer might love getting a package sooner than expected, businesses often don’t. Think about a busy warehouse – an early truck means finding unexpected storage space, scrambling for equipment, or juggling dock schedules. That’s why when setting up your OTIF system, you need to decide upfront: should early deliveries count as “on-time” or not? The answer depends entirely on who is receiving the shipment.

“… should early deliveries count as “on-time” or not?”

3. How Big Should the Delivery Window Be?

The size of the delivery window is a balancing act between flexibility, customer expectations, and operational necessities. For instance, a large 4-hour delivery window might ease the pressure on the supplier and transport provider. However for the business receiving the goods, this can lead to inefficiencies with both warehouse operations and dock scheduling. Also for residential deliveries, long delivery windows can unduly restrict consumers to having to wait at home for a delivery. 

Conversely, a narrow window requires a high level of operational efficiency and coordination for both parties. In the final analysis, all stakeholders should agree upon the optimal delivery window. Further, delivery window specifications should reflect the capabilities of the supplier and the needs of the customer, ensuring a harmonious supply chain operation.

4. Measuring On-Time Dates Correctly: Delivered, Promised

Measuring Ecommerce On-Time Delivery: Instructive Advice To Best Avoid Pointless Mistakes

To accurately measure OTIF, it’s essential to compare the delivered date with the promised date. Surprisingly, it is a formidable challenge to measure delivered and promised dates correctly. In many instances, carriers or the receiving operation do not provide an accurate delivery date and time. Also in other cases, no one in the supply chain has a clear idea of the promised date. In fact, one can conclude that the reason why many supply chains do not measure OTIF is because it is so hard to measure the dates delivered or promised for a shipment. 

One of the biggest challenges with measuring OTIF dates is that all parties, both the shipper and the receiver, many times do not explicitly agree on what measure to use when determining a successful delivery. Let’s take the example of a truck delivery to a warehouse. Does delivery mean: when the truck enters the yard, or when the trailer is dropped, or when the trailer is unloaded? Even more challenging, how do you account for delivery schedule changes by either the supplier or the receiver?

For a more detailed discussion on measuring on-time deliveries, see my article, Measuring Ecommerce On-Time Delivery: Instructive Advice To Best Avoid Pointless Mistakes.

“Measurement is fabulous. Unless you’re busy measuring what’s easy to measure as opposed to what’s important”

Seth Godin

5. Is It Better to Measure Based on the Shipment’s Case Count or By the Purchase Order’s Product Item Count?

Ideally, you measure OTIF by the customer’s purchase order (PO) and corresponding promised date. Otherwise, your supply chain is not measuring effectively the negative effect of split shipments that are delivered on different days. For instance, should you consider each delivery individually or only when the final load arrives? Again, there are many things to account for to measure OTIF correctly and achieve your desired objectives.

Also, choosing whether to measure OTIF by the case or by product item count depends on the data availability, the nature of your products and the preferences of your customers. Measuring by the case might be efficient for uniform products. Also, this has the benefit of not disclosing sensitive data about the product being shipped. On the other hand,  item count can offer a more detailed perspective that can lead to improvements across the supply chain. Another factor to consider is the possibility of modifications to the order, such as changes in case or product quantities. Indeed, there are many things to consider to achieve consistency and accuracy when measuring shipment orders “in-full”.

“If you can’t describe what you are doing as a process, you don’t know what you’re doing.”

W. Edwards Deming

6. Consequences of Setting OTIF Standard Too High Or Too Low

Setting the OTIF standard too high can lead to unrealistic expectations and unnecessary costs, resulting in constant delivery failures. On the other hand, setting it too low can result in subpar performance and decreased customer satisfaction. So, the standard should be challenging yet achievable. Moreover, a metric should not be set in stone. Indeed, the metric should be geared toward continuous improvement without compromising service quality. Lastly, setting the OTIF metric needs to be balanced with customer needs, the competition, and costs to achieve the metric standard.

7. How Poor Data Quality Affects Both OTIF Measurements and the Ability to Take Corrective Action.

First, most supply chain operations need to get OTIF-related data from multiple systems to measure OTIF. This type of data integration is difficult. For instance, these systems can include order fulfillment, shipping, TMS, carrier, WMS, and ERP to name a few. At its core, OTIF data encompasses a diverse range of systems, various data formats, and numerous communication protocols within supply chains. Complicating matters further, this data is often fragmented, duplicated, ambiguous, and riddled with inaccuracies. This leads to tedious and error-prone processes for both measuring OTIF as well as for diagnosing specific deficiencies in order to take effective action to improve operations.

Poor Shipping Data – Here Are The 4 Reasons Impeding High Tech Visibility And Actionable Analytics

For instance, these data deficiencies can include lack of a delivery confirmation status or missing an exception status on why a shipment was delayed. In other cases, the data has no linkage between the purchase order promised date and the shipment tracking number and subsequent delivery date. Also in the case of order fulfillment problems, poor data quality can be the reason why the order was delayed. For instance, a stockout could be caused by outdated supplier lead times. In other cases, managers do not have the data or incorrect data to detect that a shipment order is incomplete. 

For more information on the impact of poor data quality on OTIF measurement and taking corrective action, see my article, Poor Shipping Data – Here Are The 4 Reasons Impeding High Tech Visibility And Actionable Analytics. 

8. Do We Need an Universal Standard for OTIF Or Just Make It Understandable?

While a universal standard for OTIF would foster industry-wide consistency, this may not be the best approach. Indeed with the wide variety of supply chain operations across different sectors, a one-size-fits-all approach may be impractical as well as not meet operational needs. As stated previously, what is most important is to ensure that the OTIF metric is clear and understandable within your specific operation. Specifically, it needs to be tailored to meet your customers’ needs, and reflective of your logistical capabilities. For a more detailed discussion on the merits of standardizing OTIF measurements, see McKinsey’s article, Defining ‘on-time, in-full’ in the consumer sector.

More References.

• Measuring The OTIF Metric: The Best Ways To Focus On Uplifting Supply Chain Excellence
• Measuring Ecommerce On-Time Delivery: Instructive Advice To Best Avoid Pointless Mistakes
• Celonis’ article, OTIF explained: The what, why and how of optimizing for on-time in-full delivery

Measuring The OTIF Metric: The Best Ways To Focus On Uplifting Supply Chain Excellence

Need help with an innovative solution to make your supply chain analytics actionable? I’m Randy McClure, and I’ve spent many years solving data analytics and visibility problems. As a supply chain tech advisor, I’ve implemented hundreds of successful projects across all transportation modes, working with the data of thousands of shippers, carriers, and 3rd party logistics (3PL) providers. I specialize in launching new analytics-based strategies, proof-of-concepts and operational pilot projects using emerging technologies and methodologies. If you’re ready to supercharge your analytics or if you are a solution provider, let’s talk. To reach me, click here to access my contact form or you can find me on LinkedIn.

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