Introduction:
On-time in-full (OTIF) has gained significance throughout the logistics sector over the past few years. Big corporations like Walmart have been a big factor in its growth and adoption. Setting an on-time, in-full KPI is crucial since fines may easily cost product-based businesses seven or even eight figures. On-time in-full (OTIF) is a supply chain indicator used in the logistics sector to assess performance. The capacity of a provider to deliver goods within specified delivery windows and in the full quantities requested is known as “OTIF.”
What if OTIF Doesn’t Meet? The fact that fines apply if OTIF standards are not met is one of the features of OTIF that make it crucial for shippers. OTIF fines might vary based on how businesses calculate OTIF, although delivery penalties are the most typical. Most businesses charge a set proportion of the price of the delivered goods. For instance, if a shipper fails to deliver OTIF, a manufacturer can charge them 4% of the value of the shipment.
As was already established, fines differ based on what a corporation deems to be OTIF. For instance, some businesses might not factor early delivery into OTIF calculations. Early deliveries could be convenient and acceptable depending on the business. Carriers who make early deliveries may be penalized by other businesses. Early deliveries can also lead to problems. Consider a store that has a limited amount of room for storing goods in between shipments. The shop might not have room for the new goods if the following shipment is delivered earlier than expected.
Failure to fulfill the OTIF might result in lost sales or clients in addition to penalty fines. Negative experiences will occur when customers or retailers don’t receive their orders in a timely manner, receive inaccurate orders, or both.
Various Ways to Improve OTIF:
1. Become knowledgeable about retail requirements:
There are different OTIF measurements. Even while many other big-box retailers have embraced it or a mirrored version, OTIF primarily refers to Walmart’s compliance programme. Each merchant may define on-time and in-full differently. Others allow one or two days early or late delivery, while some require delivery on the designated delivery date. To build up your company for OTIF success, it is imperative that you first understand the ins and outs of your clients’ requirements.
2. Know about appointment scheduling information:
This is a crucial part of the retail distribution process. Your buyer will establish a specific due date, often known as a Must reach by Date (MABD), by which your product must reach at their distribution center. Sadly, those who determine due dates are not included in receiving places. You must independently schedule an appointment time with the recipient. While some receiving facilities allow for flexible scheduling, others have rigid appointment schedules. Recognize which you are dealing with to avoid having your delivery rejected.
3. Sync up production and delivery schedules:
Misalignments between production and transportation are a common cause of on-time delivery issues for organizations. With your production team, establish and manage expectations to make sure they are aware of important deadlines like delivery and ready-by dates. Make sure they are aware of the repercussions of not meeting these criteria as well as the fact that firm ship dates cannot be changed.
4. Clearly communicate with warehouses: It’s crucial to let your warehouse partners know what you expect, in addition to confirming that the production schedules are in sync. You will have the best chance of getting the product picked and packed by the time the carrier is supposed to send it if you do this.
5. Integrated lead time: It can be difficult to give ships enough advance time, and rush orders can occasionally be unavoidable. Nevertheless, doing so can greatly aid you in meeting retail shipping criteria. Your logistics partner will be able to acquire the most dependable carriers, save money, and ship orders with the required buffer time when you give them plenty of notice. In the world of transportation, the unexpected happens. An extra day or two of cushioning when shipping can mean the difference between on-time and late deliveries.
6. Get real time visibility:
For managing OTIF performance, order tracking is essential. Choose a logistics company that has tech that enables real-time updates. You may actively avoid late delivery by staying informed of what’s happening during shipping so that you can take action if any problems occur. You are at a disadvantage without it.
7. Make use of enterprise networks:
In multi-enterprise networks, many business processes throughout supply chains are optimized by collaborating with other businesses and logistical parties. Integration is also a part of it because you’ll work together with others in the network to modify associated procedures to enhance customer experience. Create a network with the supply chain companies, shippers, and merchants you choose.
8. Collaborate with preferred carriers:
Your company will have the best chance of meeting a customer’s OTIF requirements if you collaborate with preferred carriers who have experience in your industry. These carriers will have a better probability of meeting deadlines because they will be more conversant with the specifics of the sort of delivery.
9. Consider consolidation opportunities:
You can save expenses and increase on-time performance to certain receiving sites by implementing consolidation or pool distribution. Opportunities to combine shipping operations improve capacities and make services more responsive.
10. Knowing your customers well:
Understanding your customer’s precise needs can reduce time and effort that would otherwise be wasted. Every company has its own culture and manner of doing things, including extremely particular specifications for delivery windows. You are putting yourself up for failure if you assume that every customer acts under the same standards.
Conclusion:
Every supply chain metric offers a unique perspective on your operations. On-time in-full (OTIF) is one of the performance indicators that is most revealing. Important data on productivity, relationships in the supply chain, client happiness, and process effectiveness are provided by OTIF. Understanding what the OTIF metric is and how it may affect your supply chain can help you make better decisions about how to enhance various aspects of your operation. Your supply chain will benefit from improvements made to your OTIF performance, which is essential for overall performance.
References:
How to Improve Your OTIF Performance https://www.parkoursc.com/how-to-improve-your-otif-performance/
Maximizing On-Time In-Full (OTIF) In The Supply Chain https://www.fourkites.com/blogs/maximizing-on-time-in-full-otif-in-the-supply-chain/
Winning The Delivery Game: How To Improve OTIF https://www.thebrimichgroup.com/how-to-improve-otif/
Defining ‘on-time, in-full’ in the consumer sector, June 13, 2019 https://www.mckinsey.com/capabilities/operations/our-insights/defining-on-time-in-full-in-the-consumer-sector
Founder & Editor of Textile Learner. He is a Textile Consultant, Blogger & Entrepreneur. Mr. Kiron is working as a textile consultant in several local and international companies. He is also a contributor of Wikipedia.
