Think you know your true on-time delivery (OTD) rate? Think again. Most companies get OTD measurement wrong, costing them customers and revenue. Over the years, I’ve documented the top nine measurement mistakes and their solutions, based on analysis of thousands of shipping operations. In this article, I’ll describe for you the top nine mistakes in measuring on-time delivery performance. Additionally, I will provide you examples and valuable resources on what works, what doesn’t, and how to rapidly improve your customers’ on-time delivery experience.

1. Why It’s Important To Use Key Performance Indicators (KPI) To Measure On-Time Delivery Performance.

In ecommerce, on-time delivery (OTD) is key to customer satisfaction and loyalty. For businesses to keep improving their service levels, they must measure their performance, particularly delivery exceptions. The best way to do this is to use OTD key performance indicators (KPIs). For instance in ecommerce, you can use an OTD metric to assess the efficiency and effectiveness of shipping operations by quantifying the percentage of orders delivered on or before the promised date. For a more detailed explanation of KPIs related to on-time performance, see my article, The Best On-Time Delivery KPIs To Make Your Customers Delighted.

The Best On-Time Delivery KPIs To Make Your Customers Delighted

2. The Consequences Of Not Measuring On-Time Performance Correctly.

The Horrific Delivery Exception: Exploit Shipment Data To Eliminate, Make Your Customer Experience Better

Poor measurement of on-time delivery performance can cripple a business. Indeed, without accurate data, companies can’t identify shipping problems, leading to ongoing delivery issues, wasted resources, and damaged customer relationships. When decision-makers lack solid performance data, they can’t properly allocate resources to fix problems that cause shipping exceptions. As a result, delivery failures often turn one-time customers into vocal critics who share their negative experiences and never return. For a more detailed discussion on shipment exceptions, see my article, The Horrific Delivery Exception: Exploit Shipment Data To Eliminate, Make Your Customer Experience Better.

3. Nine Common Mistakes When Measuring Ecommerce On-Time Delivery.

Accurately measuring on-time delivery performance is a complex challenge that many ecommerce businesses struggle with. Indeed, they often lack both the expertise and data visibility needed to track OTD performance effectively. To improve, a business must first recognize the challenges associated with measuring their on-time delivery performance. Also, shippers must realize that successful OTD measuring requires continuous monitoring and root cause analysis of shipping exceptions. So, delivering a superior delivery experience starts by measuring your on-time deliveries effectively. To detail, below I’ll identify nine common mistakes ecommerce businesses make when measuring on-time delivery.

a. Relying On Shipment Status That Is Inaccurate Or Lacks Detail Scans.

When using faulty or summary shipment status data, businesses lose visibility into actual delivery performance. This results in your operations underestimating or overestimating delivery efficiency. For instance, lets take the example of a delivery carrier that does not provide a weather exception scan and the package is delivered late. This results in two issues. First, the customer does not get a timely alert that their package may be delayed. Second, when shippers do a root cause analysis on these types of late packages, they can only conclude that the carrier delivery network was at fault, not that it was a weather issue.

b. Relying On Incomplete Tracking Data.

If vital pieces of information are missing from a tracking system, businesses may struggle to identify areas for improvement. Also, they will fail to gain a comprehensive understanding of their overall delivery performance. For example, if a carrier or tracking system does not provide the final delivery status of a package. Do you just assume the package got delivered or do you treat this package as a delayed delivery?

c. Measuring On-Time Delivery Against The Wrong Promised Date.

Measuring against an incorrect promise date can lead businesses to believe they are doing better or worse than they actually are. As a result, it is a challenge for shippers to optimize costs and service levels. Worse, they think they are doing well on on-time performance, but their customers are disappointed. For example, an order fulfillment operation may internally measure all their orders against a 3 day click-to-delivery standard. However, what if the shipping operation is promising customers next-day delivery? This results in customer dissatisfaction even though the order fulfillment operation is meeting their three day standard.

d. Incorrectly Measuring On-Time Delivery.

To accurately measure on-time delivery, companies must establish standard KPI metrics and definitions. Specifically in developing these standards, consider all relevant factors such as order processing time, transit time, and tracking accuracy. Also, measure service performance based on the promised date provided to the customer. For instance, if different departments within a company use different criteria or definitions for what constitutes “on time” or use different promised dates, it leads to inconsistent and misleading measurements.  For more advice on measuring on-time performance, see my article, Measuring Ecommerce On-Time Delivery: Instructive Advice To Best Avoid Pointless Mistakes.

e. Neglecting To Consider The Time To Process, Pick, & Pack An Order.

When businesses don’t account for the time it takes to process, pick and pack orders, they risk over promising delivery estimates. As a result this leads to disappointed customers. For example, if a company promises two-day delivery but takes three days to process an order before shipping it out, this results in late deliveries despite the carrier meeting their transit time commitments.

f. Not Balancing Costs And Setting Too High Of An On-Time Delivery Standard.

As with any business, there is a need for cost controls while at the same time pleasing the customers. So it’s important to balance the cost of maintaining high on-time delivery with some planning and foresight. For example, don’t ship and pay for an expensive overnight 8 a.m. express package if the business you are shipping to is not open till 10 a.m. For more tips on balancing shipping costs with providing excellent service, see my article, Package Delivery – See How To Stop Surging Costs And Make Your Customers Happy for more ideas to contain shipping costs. 

Package Delivery – See How To Stop Surging Costs And Make Your Customers Happy

g. Skew Measurements To Make The Operations Look Good.

Indeed, over inflating on-time delivery results is not good for business. This happens when a shipping operation manipulates data or ignore negative trends to make their operation appear more successful than it actually is. For example, if an ecommerce operation intentionally excludes certain delayed shipments from the measurement calculations to inflate the on-time delivery rate, it misrepresents its real performance.

h. Too Focused On Collecting Carrier Service Refunds Versus Improving Performance.

This mistake occurs when businesses prioritize collecting carriers’ service performance refunds for late deliveries rather than focusing on improving their own on-time performance. For instance, it makes no sense for a company to spend excessive time and effort pursuing carriers’ service refunds instead of addressing internal issues that contribute to late deliveries. Moreover, its a drain on the company’s transportation expertise as they are focused on finding fault with the carrier versus focused on the entire shipping operations. From my experience, most late shipments are not caused by the carrier, but are due to order fulfillment issues, bad addresses, business closed, and other delivery delays not caused by the carrier.

i. Blindly Measuring Performance Because the Boss Told You To Do It.

This mistake happens when businesses measure performance without individual employees understanding the purpose or relevance of the metrics. For example, if a manager instructs employees to track on-time delivery without providing context or explaining how it aligns with business goals, it can lead to meaningless measurements that do not drive improvement. Worst, because these employees do not understand the significance of on-time performance, they are not proactive in minimizing shipping errors. Indeed, measuring OTD is a wasted exercise if the staff does not conduct root cause analysis and follow-up with corrective actions.

More References.

For more information and viewpoints on measuring on time delivery performance, see Samir Saci’s article, Logistic Performance Management Using Data Analytics, Descartes’ Analytics For Improving Carrier and Supplier Performance, VisualSouth’s How to Measure the On-Time Delivery KPI and Stacey Barr’s How To Meaningfully Measure On Time Delivery Of Anything. 

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

For more from SC Tech Insights, see more articles on shipping.