How to Improve Your OTIF Performance

Learn about:

• The importance of understanding OTIF

• How OTIF scores are calculated

• Improving your OTIF performance

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OTIF, which stands for On Time In Full, is a metric used to measure the efficiency and effectiveness of supply chain and logistics operations. Specifically, it measures the supplier's ability to deliver products in the correct quantity and at the agreed-upon time. High OTIF scores indicate that deliveries are being made accurately and punctually, which is crucial for maintaining customer satisfaction and optimizing inventory management.

The Importance of Understanding OTIF

Understanding what OTIF means and your retailer's requirements is essential to success. Most retailers will levy fines for being early or late. To effectively address these challenges, it's important to identify any underlying issues affecting your OTIF performance.

Once you have identified the problem, share this information with your sales and replenishment teams and the stakeholders involved with the problem area, such as warehouses, distribution centers, or carriers. Collaborating with these teams ensures everyone knows the issues and can work together to implement solutions that improve delivery performance and compliance with retailer requirements.

Supply Chain Success Factors

How are OTIF Scores Calculated?

OTIF scores are, unsurprisingly, calculated on two different metrics: On Time and In Full.

On Time tracks whether deliveries are made within the specified delivery window. In Full measures whether the entire order is delivered as requested, without any shortages or missing items.

Although specific retailers may calculate OTIF differently, in general, the calculation is some variation of the following:

Total Deliveries Made On Time and In Full / Total Deliveries Made × 100 = On Time In Full Rate

In practice, that looks like:

432 / 500 × 100 = 86%

While getting 100% is unlikely, maintaining a high score is important to ensure operational efficiency and strong business relationships with your retailers.

Improve Your OTIF Performance

If your OTIF performance is not meeting your standards, there are several areas you can address: 

Get Familiar with Your Retailers

There is no industry standard for OTIF, as different retailers may have varying expectations and requirements. Understanding each retailer's specific OTIF criteria is crucial. Take the time to learn their delivery windows, packaging guidelines, and OTIF standards.

For example, Walmart's requirements for their suppliers include a 90% prepaid On-Time goal, a 98% collect-ready goal, and a 95% In-Full goal. Failure to meet these goals result in hefty fines for Walmart suppliers.

Related Reading: 

• 2024 OTIF Performance Metrics

• The Utilmate Guide to OTIF

• Common Target Compliance Fines 

• Revenue Loss at Home Depot

• Amazon Deductions Explained

Improve Communication

Effective communication is key. Maintain open lines of communication with your suppliers, logistics partners, and retailers. This communication could include regularly updating all parties on order status, potential delays, and any issues that may arise. 

Establish Internal Standards

Establishing internal protocols and documentation to set clear expectations goes hand in hand with communication. Ensure that all relevant stakeholders have specific documentation outlining their respective expectations. In doing so, you can increase accountability, transparency, and alignment throughout your organization. 

Dive Into the Root Cause 

Track key data related to OTIF, such as delivery times, order accuracy, and inventory levels. By leveraging data analytics, you can identify patterns and trends that reveal inefficiencies or areas for improvement. Staying compliant with your retailers is never a one-and-done situation. Tracking your data and making data-driven changes enables continuous improvement of your OTIF performance.

Related Reading: Root Cause Analysis at Walmart

Stay Compliant with SupplyPike

Need some support staying compliant with your retailers? SupplyPike's Compliance Solution is tailored to help you meet your compliance goals through data aggregation, detailed scorecards, and dispute tracking.

Schedule a meeting with our team to see if SupplyPike is the right fit for your business!

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