On-time Delivery (OTD)

The On-time delivery performance refers to the ratio of customer order lines shipped on or before the requested delivery date / customer promised date versus the total number of order lines. This is usually expressed as a percentage and can be calculated for several measurement periods.

What is required to Deliver On-time?

  1. You have forecasted estimated demand, ran MRP and ordered materials. You create a purchase order for the required materials.
  2. The materials are received, recorded and put into your raw material stores area.
  3. An order has been received, you check available inventory, determine that you can produce the order and promise your customer delivery on a specific date.
  4. You create a work order and issue it to production.
  5. The materials are correctly picked, moved to the production area and produced.
  6. Inventory is yielded and quality confirms that the produced inventory meets product specifications.
  7. Inventory is put-away to the finished good-storage location.
  8. Per customer promised date, inventory is picked and delivered to the shipping dock where proper shipping documentation is prepared. In chemical or pharmaceutical companies, shipping documentation typically includes other documentation such as Certificate of Analysis (COA), SDS etc.
  9. The delivery is scheduled, the truck arrives to take the finished goods away and the delivery arrives on-time and undamaged.
  10. You just executed the perfect On-time Delivery and, most importantly, your customer is happy that you met their expectations.

Why is OTD Important?

  • On time delivery drives better collaboration with your customers, ensures reliability of delivery and most importantly customer loyalty.
  • Customers expect you to meet the promised delivery date. It is important to set the right expectations with your customers and meet them. If you can’t meet your customer’s expectation and deliver on time then they will find a supplier who can.
  • Consistent problems with on-time delivery will not only disrupt your business or result in loss of reputation but will also affect many other areas of a company’s supply chain and can irreparably damage customer relationship and long-term success.

How to deliver on time?

  • Understand and track the late delivery reasons, analyse the various factors that contribute to late delivery and identify the root cause.
  • After identifying the root cause and the issues in late delivery, prioritize the issues and focus on the actionable steps to success.
  • Develop a plan and implement it.
  • Monitor results and revise the plan accordingly.