OTIF, On Time In Full, is a metric used to assess performance in the logistics industry. The importance of this performance metrics has grown over the years as many big organisations have started using it to gauge their performance. OTIF has gained special significance in eCommerce logistics. Companies are using it as a key performance indicator (KPI) to increase employee productivity and deliver satisfactory services to their customers.
In this article, we have shared how to calculate OTIF, its importance in the supply chain, tips to enhance it, its implications beyond logistics, and more. You will develop a clear understanding of the on time in full concept by the time you finish reading this article. So, let’s get started!
Definition and Full Form of OTIF
OTIF is calculated to determine the ability of a supplier to deliver products within the committed timeframe and in full quantities as per the order. Metric for Ecommerce Success The concept was floated in 2017 with the aim of increasing the efficiency of the suppliers. Walmart was among the first companies to levy fines on the suppliers who failed bosnia and herzegovina phone number list to deliver their products on time or did not deliver the complete orders as per commitment. OTIF has become a means to assess the supply chain performance ever since. In addition to ensuring timely deliveries, it helps improve overall store operations by optimising inventory planning and order fulfillment process.
Significance of OTIF in the Context of eCommerce Logistics
One of the challenges eCommerce businesses face is choosing the right shipping partners to ensure safe and timely deliveries. On time in full has gained special significance in the context of eCommerce logistics as it helps businesses assess and improve the efficiency of their delivery process. It helps gauge the performance of their shipping partners by Metric for Ecommerce Success determining whether processes such as picking, packing, and shipping are being carried out in a timely and efficient manner. The performance at all these stages impacts the final delivery. OTIF helps identify which step in the supply chain needs improvement and thus helps eCommerce stores gain greater control of the process. With this information, they can plan better and handle the issues that may be arising at different stages to ensure timely deliveries. ECommerce businesses are advised to maintain an OTIF rate ranging between 80%-90%.
Exploring the Broader Implications of OTIF Beyond Logistics
While OTIF is mostly known in the context of logistics, it has a bigger role to play for businesses. As organisations enhance their supply chain process by enhancing their OTIF rates, they witness improvements in various aspects of the business. How? Well, as it optimises the delivery process and maximises the number of timely deliveries, businesses do not require shelling expedited shipping fees. Timely deliveries also help to improve the overall customer experience. Research shows that 55% of consumers prefer shopping with brands that offer fast and timely deliveries.
How does OTIF Affect Customer Satisfaction and Brand Reputation?
OTIF measures the performance of the suppliers and the efficiency of the supply chain process. Companies penalise the suppliers if they aren’t Metric for Ecommerce Success able to deliver the orders on time and in full. To avoid incurring penalties and losing clients, suppliers strive to enhance their performance. They aim for secure and on time deliveries and ensure that the accurate quantity of goods reaches the customers. Customers appreciate timely deliveries.
OTIF also impacts the brand reputation in a positive manner. Happy and satisfied customers often spread good word about the brand. They recommend such brands to their family and friends. These days many people even take to social media to write positive reviews about the brands. Thus, it helps in word-of-mouth publicity and strengthens the brand’s reputation.
Step-by-Step Guide on How to Calculate OTIF
Thereafter, multiply the derived answer by 100 to get the OTIF percentage. Here’s the formula:
- OTIF% = (Number of on time in full orders/total number of orders) * 100
Let us understand this better with the help of an example:
For instance, you have shipped a total of 1,000 orders in a particular week. Out of these, you were able to deliver 840 orders on time and in full publish and distribute podcasts with hubspot and the rest could not be delivered as per commitment. Here is how you will calculate its OTIF rate:
Importance of Accurate Measurement in Assessing Performance
It is important to calculate the OTIF rate accurately to assess the supplier’s performance properly. Only when you have the right figures. You will be able to understand the scope of improvement and prepare a plan to enhance the performance. The amount of penalty to be levied also depends on the OTIF calculation. Thus, even a slight mistake in computation can lead to wrong calculations moving forward.
OTIF measurement goes beyond assessing the supplier’s or shipping carrier’s performance. Low OTIF rates indicate a lack of planning at various stages in the supply chain process. Poor management practices, and outdated warehousing practices albania business directory among others. Its accurate measurement is thus important to assess performance at various levels.