- A supply network’s performance is evaluated using the metric known as On Time In Full (OTIF), which counts the number of orders that were delivered on time and in full.
- Achieving a high OTIF is crucial for ensuring customer happiness and loyalty because they rely on prompt and accurate deliveries.
- Inefficient warehouse management, inaccurate arrival time estimates, and unpredictable road conditions are the usual causes of poor OTIF performance.
Having poor OTIF is something that businesses must avoid at all costs. For example, the food retail industry loses a lot of revenue due to spoiled food caused by delivery delays. The reason why OTIF is a key performance indicator is its unbridled simplicity and utility in the industry.
But what even is OTIF to begin with? This acronym obviously would be very foreign to most outside the operations dealing with logistics. OTIF stands for “On Time In Full” which is basically useful for measuring supply chain performance and accuracy.
This is the basic meaning of OTIF, however, this will hardly suffice for most readers. That is why we made this blog that goes over an in-depth explanation of OTIF, how you can calculate it yourself, and curb the factors that contribute to your OTIF performance degrading over time.
Table of Content
What is On Time In Full (OTIF)?
OTIF, which means “On Time In Full,” is an acronym. It is a metric that is frequently used to assess how well a supply network delivers. Basically, it measures the number of orders that were delivered within the given timeframe and quantity.
OTIF calculates the percentage of customer orders that are delivered on time and in full. OTIF is a crucial metric for supply chain management because it offers a precise and unbiased assessment of how well a business is delivering on its promises to consumers.
Since customers depend on prompt and accurate deliveries to keep their own operations running efficiently, achieving a high OTIF is essential for guaranteeing customer satisfaction and loyalty.
OTIF as a KPI
For companies looking to monitor the effectiveness of their supply chain processes, OTIF is a helpful Key Performance Indicator (KPI). Businesses can learn a lot about how efficient and successful their supply chain is by tracking the percentage of customer orders that are delivered on time and in full.
As a KPI, OTIF offers a precise and unbiased measurement of supply chain performance that can be used to assess advancement toward particular company goals. For instance, a business might decide to aim for a specific OTIF rate and use that measure to monitor its development over time.
What are the Steps to Measure OTIF?
Before you get to calculating your OTIF rate, it is crucial to have the most accurate data for your calculations. If you do not have this data, then it will be very difficult to come up with a solid OTIF rate as the equations rely on data to be complete. Once you have all your delivery data ready, you are ready to measure OTIF.
Given below are the steps to calculate OTIF.
Step 1: Collect the number of successful timely orders and total orders
Step 2: Divide the number of that you delivered on time and in full by the number of total orders
Step 3: Multiply the sum by 100 to get your OTIF rate
OTIF Formula: Successful timely orders / total orders X 100
Why is it Important to Check Your OTIF Percentage?
OTIF is an important supply chain metric of how effectively your business is fulfilling customer expectations. It is critical to focus on improving OTIF much like how it is to improve order accuracy. Customer satisfaction, trust, and eventually customer loyalty can all be improved by delivering goods on time and in full.
You can find possible cost-saving opportunities with the aid of OTIF. Deliveries that are late or incomplete can result in extra expenses like expedited processing, rush shipment, and customer penalties. You can lower these expenses and raise your bottom line by raising your OTIF proportion.
You can find inefficient places in your supply chain by calculating your OTIF percentage. For instance, you might need to handle problems with inventory administration, transportation, or supplier communication if your OTIF scores are consistently low.
Common Reasons Leading to Poor OTIF Performance
There are plenty of factors that can result in poor OTIF performance, however, most of these can be attributed to issues that arise from unoptimized shipping procedures. Given the supply complexity of the subject, it is best to look at each of these factors individually.
1. Poor warehouse management
One of the biggest internal issues that affect supply chain efficiency is poor warehouse management, which causes delays downstream for deliveries and distribution. This issue is well known for being difficult to resolve because of the limited ways to improve warehouse efficiency.
The number of operations carried out at the warehouse makes the chances of delivery errors occurring spike across the board. These errors include delivery delays, parcel swapping, and damaged goods.
2. Incorrect estimation of arrival times
One of the universal problems common across supply chains is the inability to meet fixed requested delivery dates. Any entity involved in the supply chain is bound to run into this problem at least once in its entire career given the systems that are traditionally used to estimate arrival times.
The usual procedure to have a specific delivery slot allocated involves a lot of guesses and estimations that are not backed by any solid metrics. Once the incorrect estimated delivery times are given, they are nearly impossible to meet and eventually lead to the degradation of your OTIF rate.
3. Unpredictable road conditions
One of the biggest contributors to supply chain complexity and logistical issues is the unpredictable road condition that affects delivery times. This evasive problem is one that plagues the entire industry and yet seems nearly unsolvable to most.
If the weather is bad enough, road conditions can cause collisions and other accidents that may result in serious bodily harm and delivery failure. When you take into account the sheer fluctuation in weather that may occur, you will see why the issue of unpredictable road conditions is so potent.
4. Unoptimized delivery routes
One standard part of planning deliveries that still lingers in the modern day is manually planning delivery routes. Not only is the process of manual route planning highly time-consuming but it is also very unreliable when you want to give any fixed delivery deadlines to your clients.
Manually planned routes also severely limit the capacity of goods that can be delivered by your fleet because of the additional time taken by traversing through unoptimized routes. This is why the use of unoptimized routes can make your OTIF destined to fall.
5 Ways to Improve Your OTIF Score
Seeing the issues that are behind a degrading OTIF score, it is easy to assume that the solutions to these issues are going to be very meticulous. However, that couldn’t be farther from the truth after you look at all the ways to improve OTIF given below.
1. Improve communication
One of the easiest ways to significantly improve OTIF performance is by having your team be able to clearly communicate with each other to avoid any work-related doubts. While clear communication is essential for internal operations, it is equally important for external cases.
Using the help of joint performance management, you will have clearer communication with your business partners such as manufacturers, suppliers, and carriers. Once a clear line of communication is established you can easily estimate the time it would take to complete any given operation.
2. Accounting for delays in advance
Due to the unpredictable nature of shipping goods, it is often best to account for additional time for any delivery delays or logistical issues that may pop up. This helps alleviate the stress of uncertainty in the logistics industry and makes it easy for you to meet the prescribed delivery windows.
Such redundancies are crucial when looking to maintain a good OTIF rate for any business as there is no way to tell the kind of issues that you may face. In some operations, you may be able to use this additional time to deliver better packaging services for your customers.
3. Better warehouse organization
Perhaps the fastest way to resolve any issues regarding warehouse inefficiencies is by using better organizational tactics at the warehouse. These warehouse organization tactics boast plenty of advantages that range from better order accuracy to faster pickup times.
You must prioritize keeping your warehouse simple to help your workers easily navigate through it and perform to the best of their abilities. Hence, better warehouse organization can help you get a high OTIF score.
4. Conduct regular training sessions
A great method of boosting the working speed of your staff is by conducting regular training sessions that help them understand and refine their designated roles. Enforcing the compliance of standard operating procedures with training sessions helps keep your employees at the top of their game.
This is because with these sessions they will be well versed in their duties which leads them to have better clarity and confidence when carrying out their tasks regularly. Such clarity and confidence are vital especially if you are going to be working with a lot of new workers.
5. Use route planning software
As previously stated the problems that are caused by the following inefficient routes are plenty and cause a myriad of issues for your delivery targets. Outsourcing these issues to route planning software allows you to automate the arduous task entirely.
Using a route planner for your delivery routes ensures that you not only save time on all the planning that is involved but also get the most optimized routes in existence. A route planner also accounts for nearly all the factors that may affect your delivery times.
Boost your OTIF Score Using Advanced Route Planning and Optimization Software
Upper, a route planning and optimization software, is a perfect solution to quickly improve your OTIF. However, with all the options that are on the market, it is hard to choose the perfect one for yourself. This is why we bring you Upper, the state-of-the-art route planner that bumps up your OTIF with its innovative features.
Not only does Upper grant you the supreme route planning and optimization abilities of a route planner but also gives you an option for route scheduling. The power to schedule routes months in advance further alleviates the stress of meeting delivery deadlines for businesses.
Such a massive array of brilliant features at your disposal helps you refine your operations to a degree that allows you to easily surpass your competitors. The humongous perks granted by them are why you see such massive adoption of route planners in the entire shipping industry.
Wipe Off Your OTIF Issues Using Upper
Delivery delays and faulty estimated times of arrival may not help you achieve high OTIF. But, you can turn the tables using Upper and level up the OTIF score in a minimum time.Start a Free Trial
Customer satisfaction, customer retention, and eventually revenue can all increase when a business consistently meets or exceeds its OTIF targets. However, repeatedly failing to meet OTIF goals can result in lost sales, increased transportation and inventory costs, and reputational harm to the business.
Companies can enhance the skills and knowledge of their workforce, which will eventually improve OTIF performance, by giving training and development a top priority. Investing in employee training and development can also help to increase engagement and morale, which will increase productivity and foster a more positive workplace atmosphere.
The success of a company’s OTIF can be significantly impacted by the use of third-party logistics providers (3PLs). A company’s overall supply chain efficiency and effectiveness can be increased by using 3PLs to assist with tasks like shipping, warehousing, and order fulfillment.
The critical OTIF metric is something that a lot of businesses aspire to maximize as it can make or break the reputation of any given company. Seeing how crucial it is to maintain good OTIF, it is no wonder why companies constantly look for ways to improve it.
Among the dozens of ways to improve OTIF, finding the perfect solution that suits your needs can be a daunting task, however, there is one solution that can be easily implemented. Yes, using a route planner to optimize your delivery operations greatly.
And if that’s the case why not opt for the best route planner on the market to take care of all your routing needs? Upper has got your back when it comes to planning the fastest routes in existence for you with just a few clicks. Experience the efficiency granted by Upper today with our 7-day free trial.