What Is OTIF In The Supply Chain?
As you develop your supply chain strategy, you might encounter the term OTIF, which stands for On-Time In-Full. But what does this term mean and how does it relate to your supply chain? At Unilog, we help organizations streamline their shipping processes to improve their OTIF metrics. In this article, we’ll talk about what OTIF is, why it’s important, and how to calculate and improve your OTIF.
What is OTIF?
OTIF stands for On-Time In-Full. It is a metric that companies use to measure their overall delivery success rate. Your OTIF represents the percentage of deliveries that are made on time to the correct location with the correct product in the right amount.
Ideally, your OTIF would be 100 percent all the time. However, there are so many variables within the supply chain that can interfere with your success. Because of this, many organizations set a realistic OTIF goal between 85 and 90 percent.
Why should I measure my OTIF rate?
Your OTIF rate is more than just a number – it is representative of your success rate throughout the entire supply chain. By consistently filling your orders accurately and delivering them on time, you generate loyalty among existing customers and improve your overall reputation.
Consistently tracking your organization’s OTIF rate gives you valuable data that you can use to improve your supply chain strategy. Collecting this data can help you identify what causes late, inaccurate, or missed deliveries and take steps to avoid them in the future.
Once you’ve hit your OTIF goal, you can use those metrics as a selling point to future customers. Your clients want to know that you can consistently meet your delivery goals, so a strong OTIF rate is a great selling point. Calculating your OTIF rates is also a way to hold your entire team accountable and motivate them to make on-time deliveries.
Having a strong OTIF rate can also help your organization financially. If your deliveries are late or inaccurate, it can result in fines, lost product, and extra shipping costs to redeliver the correct products. Focusing on your OTIF rate will save your organization from these extra expenses in the long run.
How To Calculate OTIF
When calculating your OTIF rate, you’ll need to calculate two different metrics – your on-time delivery rate and your in-full delivery rate. There isn’t one standard formula for calculating OTIF. Many organizations develop their own OTIF formulas based on their individual operations. A very simple approach is to calculate the number of OTIF deliveries divided by the number of total deliveries, which should give you a percentage.
How To Improve Your OTIF Percentage
While OTIF is a relatively simple concept on paper, improving your OTIF rate can be difficult to do. It takes time to increase your OTIF rate, which is why it’s important to continuously monitor your deliveries and set new goals as you improve.
There are always going to be some variables that are out of your control and can negatively affect your delivery rate. These include things like weather, staff illness, or issues with third-party contractors. However, it’s important to take steps to manage the things that are in your control so that these variables will have less of an impact on your overall OTIF.
Here are some of the steps you can take to improve your OTIF percentage by minimizing late or inaccurate deliveries.
1. Create a single point of truth.
In order to reduce shipping delays or inaccuracies, you need to have all of your data running through the same system. All relevant parties should be able to access order data at any time. Your team should also immediately indicate when and why delays happen so they can be corrected as soon as possible.
If your data is spread out in many different places, it will be difficult to access when you need it. This means that your team likely won’t be able to correct mistakes until it’s too late.
2. Make sure your shipments are ready to leave on time.
OTIF deliveries start from your own warehouse. Your warehouse should be well-organized so that staff can easily find each product and pack shipments quickly. A comprehensive sales and operations planning software program can help your team stay on top of your inventory. This type of software can also help you identify when something goes wrong so you can make improvements.
Having defined processes in place for inventory management and order packing sets you up for success down the road. If you do encounter delays in the warehouse, be sure to adjust your delivery times accordingly and communicate with the end customer to avoid problems.
3. Communicate clearly with third-party shipping partners.
All shipping companies have their own procedures in place for receiving and processing orders. To prevent delays once your shipments are on the road, make sure you’re communicating directly with all of your third-party partners. Take the time to understand their order processing requirements and make sure your team adheres to them. This may mean filling out necessary documents ahead of time or labeling each shipment a certain way.
Frequent communication builds trust among shipping partners so you can solve shipping problems faster. Before each shipment goes out, make sure you’re in communication with your drivers, receiving facilities, and any other partners to make sure they’re prepared.
4. Implement automated shipping technology.
Modern technology can speed up some of the pain points in your shipping process to reduce late or incorrect deliveries. Look for places in your supply chain where you can implement automation to speed things up and reduce human error.
Modern customers expect speed and accuracy when it comes to deliveries. This is why OTIF is such an important metric to monitor for any successful business. If you’re looking to improve your OTIF rate but don’t know where to start, Unilog can help. Contact us today to learn more about our services.