In the fast-paced realm of ecommerce and supply chains, savvy businesses are swiftly recognizing that exceptional on-time delivery (OTD) is the heartbeat of customer delight. In fact, embracing an outstanding OTD is increasingly becoming the linchpin of a thriving ecommerce operation. To improve your customers’ delivery experience, businesses need to harness the power of key performance indicators (KPIs). Indeed, KPIs enable operations to quickly identify and rectify any shortcomings so they do not happen again.

So, what are the top KPIs specifically targeting on-time delivery? Which KPIs can sharpen your ecommerce and supply chain operations by eliminating bottlenecks, inefficiencies, and shipping issues related to timely deliveries? Without a doubt, knowing and using these OTD KPI are key to a business’ survival. Join me as I look at the top 6 on-time delivery KPIs that will enable you to significantly enhance your customers’ delivery experience.

“It is not necessary to change. Survival is not mandatory.”

W. Edwards Deming

1. On-Time Delivery KPI – The Best Measure of Delivery Performance.

First and foremost, the On-Time Delivery Key Performance Indicator (KPI) is a crucial metric for evaluating the efficiency and effectiveness of a company’s ecommerce delivery process. This metric measures the percentage of orders delivered on or before the promised delivery date. A higher on-time delivery rate indicates a better customer experience. Obviously, your customer is pleased because they receive their orders when expected.

By monitoring and improving this KPI, businesses can enhance their overall customer satisfaction and build loyal, repeat customers. Below is the 2-step process for how you calculate your On-Time Delivery (OTD) rate for this key KPI:

2-Step Process to Calculating On-Time Delivery

a. First Determine If a Shipment Is Late.

The criterion is straightforward: a shipment is considered on-time if the promised delivery date is equal to or later than the actual delivery date; otherwise, it is deemed late. For instance, if a shipment was promised by April 1st but delivered on April 2nd, it is categorized as late. Also, if this is a time-definite shipment such as a next day express parcel guaranteed by 10:30 am, then measure by date and time. Moreover, this assessment should be applied to all shipments, as each one is either on-time, late, or undelivered. For efficiency and accuracy, it is advisable to collect shipment data and leverage a business intelligence (BI) tool to automate this evaluation process.

b. Second, Compare Your Calculated OTD Rate Against Your Target KPI .

Next, you aggregate your delivery results into an overall OTD rate and compare it to your target KPI. For example, as an ecommerce company you may set your target OTD KPI as 98%.

Then, you need to calculate your OTD rate and see how it compares to the OTD KPI. The OTD formula is as follows:

• the number of shipments delivered on-time divided by total number of deliveries
• then multiplied by 100 to get the OTD percentage.

For example, if you have 100 shipments and 95 were on-time, then your OTD rate is 95%. As a result, you need to prioritize an root cause analysis as you are not meeting your OTD KPI of 97%.

“Without data, you’re just another person with an opinion.”

W. Edwards Deming

2. Order (Click)-To-Delivery KPI – Measuring Both Ecommerce Fulfillment and On-Time Delivery.

This is the key metric for ecommerce operations as it measures the entire fulfillment operation, not just the delivery segment. Basically, this KPI measures the orders delivered on-time divided by the number of orders. A variation of this KPI is called the perfect order index. Specifically, the perfect order index is a a compilation score that includes the percentages of orders delivered on-time (i.e the OTD KPI), percentage of orders completed, percentage of damage-free orders, and other measurements such as accurate documentation.

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3. Delivery Promised Accuracy KPI – A Competitive Promised Date Is the Key Driver for On-Time Performance and Customer Delight.

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This metric consists of measuring customer orders delivered on or before the customer’s promised delivery date. From there, you then divide this number by the total number of orders. In particular, this KPI highlights the importance of the promised date that is determined by you, the shipper. Additionally, your on-time delivery rate is a key driver for meeting this KPI. 

Indeed, it is important to understand how much the promised date will drive your transportation service levels. Further, how you set your promise date can be a two-edged sword for your operations. For example, if you set your promised date standard at four days, you may lose customers to competitors like Amazon with a two or a one-day standard. On the other hand, if you set an unrealistic promised date standard such as one day for all shipments, you end up with many late deliveries and a low delivery promised accuracy KPI. So it is key to set a competitive promised date that your ecommerce operations can deliver on to delight your customers.

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4. Order Fill Rate KPI – 100% Order Fill Rate and 100% On-Time Delivery Makes for a Happy Customer.

The Order Fill Rate KPI calculates the proportion of orders fulfilled without any shortages or shipment issues. Combining the order fill rate with the on-time delivery rate is essentially your perfect order index or Order (Click)-To-Delivery rate as described above. Ideally, your goal is to have a 100% KPI for your order fill rate. This is essential for an outstanding customer experience, as it ensures that customers receive what they ordered when they expect it. Achieving high marks on both these metrics demonstrates a company’s commitment to excellence and serves as a significant differentiator in competitive markets.

5. On-Time, In-Full (OTIF) – the Ultimate Supply Chain Metric.

OTIF is a powerful metric that gauges how timely and accurate your entire supply chain delivers on its promises. Indeed, OTIF isn’t just about deliveries, but also measures the quantities in the shipment against the original purchase order. So, the OTIF metric also offers exceptional insights into your entire supply chain. This includes from the very moment an order is placed all the way through to its final destination. So, by harnessing the power of the OTIF metric, this will result in smoother overall supply chain operations, slash costs, and delight customers. Below is a definition for On-Time, In-Full (OTIF):

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“… 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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The OTIF calculation is as follows:

OTIF (%) = (on-time, in-full orders / total number of deliveries) x 100

So, the closer the OTIF rate is to 100%, the better the supply chain operation is doing. Further, this OTIF metric is truly a terrific metric for managers to use throughout the supply chain. This is especially true for order fulfillment operations, both shipping to businesses and to consumers. For a more detailed discussion on OTIF, see my article, Measuring The OTIF Metric: The Best Ways To Focus On Uplifting Supply Chain Excellence.

6. WISMO (Where Is My Stuff?) Calls / Returns KPIs / Post-Diagnostics – Analytics to Determine the Whys Behind Poor Shipment Status and Post-Delivery Mishaps.

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a. WISMO (Where Is My Order?).

A lot of customer calls into ecommerce contact centers are “Where is my stuff?” calls. It is key that you keep track of these types of calls and take proactive actions to assure your customers have visibility to their shipment orders. Indeed, your customer service agents across all channels need to have accurate, complete, and timely  information to customer order status. Lastly, by minimizing WISMO calls, this will help you reduce returns and bad customer reviews.

b. Returns KPIs.

Further, a large percentage of returns is an indicator that your customers are less than delighted with your ecommerce operations. So having a returns KPI will help focus your operation on decreasing returns. Now, returns can happen for a variety of issues. First, it can be because you delivered the shipment late and the customer had no use for the product. Other reasons for return to shipper (RTS) events can include things like customer moved, shipment damaged, wrong product shipped, product doesn’t fit, or customer mis-ordered to name a few.

c. Post-Diagnostic Analytics to Improve KPIs.

Now, it is not enough to just measure your company’s on-time performance using KPIs. This is just the first step in enhancing your operational performance and delighting your customers. Indeed, KPIs are crucial to identifying problems and areas of improvement within your entire supply chain operation. However, the next step in your analysis is for your operations team to diagnose what happened. Then, lastly take corrective action to resolve the root cause of the problem. As a result, your KPIs will improve over time as well as your overall service performance. For a more detailed discussion about diagnostic analytics, see my article, The Truth About Diagnostic Analytics: A Forgotten Way To Better Business Performance.

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“It is not enough to do your best, you must know what to do, and then do your best.”

W. Edwards Deming

For more ideas and information on improving your ecommerce supply chain, see Shipium’s Complete Ecommerce Supply Chain Guide and Purolator’s What To Know About eCommerce Supply Chain Management.

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