What Is OTIF KPI? How To Calculate + Importance For eCommerce

Are you aware of the Order-Timely In Full (OTIF) key performance indicator (KPI)? As an eCommerce business owner, it's essential to understand the value of OTIF and how this metric ultimately impacts your bottom line. The goal of on-time delivery is a core focus for today's businesses — big or small. To be competitive in today's market, knowing what OTIF KPI is and understanding its Importance is essential. Keep reading to learn about OTIF KPI, including what it measures and calculates and how it can help drive success in your eCommerce initiatives.

What Is OTIF (On Time And In Full)?

OTIF (On Time And In Full) is a service-level agreement between a buyer and seller that guarantees that the seller will deliver all goods to the buyer in total quantities, on time, and according to the predetermined dates specified by the buyer. It ensures the predictable performance of both parties to avoid late shipments, excess or insufficient deliveries, or any wastage incurred as a result of discrepancies. 

The purpose of OTIF is usually twofold: it reduces inventory costs for both buyers and sellers and eliminates delivery delays that can lead to customer dissatisfaction. An OTIF contract requires accurate forecasting from both sides: buyers should anticipate their needs accurately, while suppliers must have an efficient planning process to handle orders reliably.

For example, suppose Amazon signs an OTIF agreement with its supplier for 1000 units of product "A" by June 15th, 2019. In that case, Amazon assumes responsibility for notifying the supplier about their needs at least one month prior. The supplier then has until June 15th, 2019 (or any other prearranged date)to deliver all 1000 units to be ready for sale when customers come looking for them. By using this approach, suppliers can minimize wastage while improving sales opportunities with customers who rely on delivery accuracy and timely replenishment schedules. 

Overall, OTIF can provide significant cost savings through increased efficiency throughout supply chain processes - reducing waste due to overstocking or understocking products; eliminating late deliveries; improving customer satisfaction; and ensuring better total inventory management through more effective demand/supply synchronization between parties involved in each transaction.

How To Calculate OTIF

On-Time

(Delivery Time) - (Confirmed delivery time)

In Full

(Cases matching the criteria) / (Total number of cases)

‍

Importance Of OTIF For eCommerce

OTIF, or On Time In Full, is an essential metric for eCommerce businesses to track. OTIF measures the on-time delivery of products and services to customers and is a crucial indicator of customer satisfaction. It also helps organizations ensure that all parts of the supply chain are running smoothly.

The Importance of OTIF can be seen in several areas:

1) Satisfied Customers

 Meeting OTIF goals will lead to higher customer satisfaction since orders will arrive on time, meaning customers don't have to wait for their products or service. This leads not only to a better overall experience but can also further improve your brand reputation when it comes to future purchases by these satisfied customers, who now perceive you as reliable and trustworthy.

2) Increased Sales

When it comes down to it, having more orders arriving on-time increases sales because happy customers are more likely to repeat orders -- leading you closer to becoming a successful business in your niche market.

3) Improved Efficiency Throughout Your Supply Chain

Suppose your organization has frequent delays or fails to reach its delivery deadlines. In that case, there needs to be something fixed with either your logistics partner or internal processes which need urgent attention if you want to get faster at optimizing deliveries. Monitoring OTIF performance allows managers and business owners to identify where problems lie within the supply chain so that corrective action may be taken quickly before costly delays become commonplace due to stagnation in growth due to poor post-purchase experiences.

‍

Related: 3pls And 4pls: How Can Supply Chain Management Minimize Cost?

‍

4) Reduced Cost Overhead & Resources Allocation 

 Ultimately having clear visibility into where content spent most often stalls throughout various parts of delivering products & services allows companies to reduce costs associated with rectifying such issues (i.e., overages resulting from too much resource allocation taking place without proper demand realization). Additionally, given Nowadays, digital products & services require extra resources & costs associated with creating user experiences that must match up effectively against other online competitors – ensuring shorter periods of separate start dates & finish dates when deploying content makes sense both financially (no overdue fees )and strategically (ability compete within ever-changing market conditions ).

Benefits Of Achieving OTIF Status

Improved Brand Image and Industry Reputation

By achieving On-Time In-Full (OTIF) status, organizations can increase their reputation and credibility amongst their peers in the industry. This could lead to increased customer loyalty, more orders from existing customers, and a broader reach of potential new customers.

Significantly Lower Risk of Returns and Refunds

By ensuring products arrive on time and in total, there is a drastically lower risk of returns or refunds due to dissatisfied customers. This also leads to reduced costs associated with administering those returns. 

Better Carrier Relationships Across The Board

When working with carriers, having an OTIF record speaks volumes about your business's commitment to quality performance standards. Carriers are more likely to prioritize deliveries for customers they know will pay on time and on the whole, resulting in improved working relationships. 

Lower Transportation Costs And Related Fees

 When deliveries are consistently made on time and in whole, organizations can access cheaper rates with carriers due to their demonstrated performance standards. This can lead to significant long-term cost savings.  

Improve Success With Consistent Performance

 By consistently meeting OTIF goals, your team has greater confidence in its ability to deliver orders accurately and quickly. As they become more comfortable with the process, they'll be able to work faster and increase customer satisfaction. 

Easier To Resolve On Time In Full Fine Disputes

Organizations that consistently meet their OTIF goals will find it easier to resolve disputes regarding on-time total fines. This is because carriers have a greater trust that the customer will resolve any issues quickly and efficiently, unlike those who don't meet their standards. 

It Frees Management And Sales Teams To Focus On Customers

By consistently meeting OTIF goals, management and sales teams can spend more time with customers. They can focus on providing better customer service, increasing customer loyalty, and growing their business instead of dealing with delivery delays or mistakes. 

Manage On-Time In-Full Delivery Metrics Effectively With Insight And Guidance From Industry Leaders

When working with industry leaders to manage your OTIF metrics, you'll have access to real-time data and guidance that can help you make decisions that will improve your chances of success. This can significantly increase your on-time, in-full delivery rate and a corresponding decrease in costs associated with delays or mistakes.

Tips For Achieving And Maintaining OTIF Status

Know Your Retailers' OTIF Requirements

Retailers have personal definitions of "on time and in full." If you have an optimistic deadline, you can only be given deliveries up to two days early or late. It would help if you first learned about your clients' wishes to understand how to correctly set up OTIF for your company's success.

Keep Track Of All Schedules

A transport timetable that permits hundreds of deliveries with varying order precedence and assigns them to drivers is required. In retail, this is a crucial phase of the transport process. Remember to notify and inform your customer of your order quantity adjustments so that merchants' systems have the proper due dates and amounts. If you do, you can avoid getting a bad score.

Switch Your 3PL Company

Choose a logistics options dealer with a robust service network, understands complicated delivery difficulties, and has access to contemporary technological know-how to assist you in succeeding in retail logistics. Seek a logistics partner with a tested music document of on-time delivery to large-format merchants.

Find Ways To Save Time And Resources

Having a high charge of errors may jeopardize all prior work. It would help if you discovered a way to shop time and assets to avoid making mistakes or causing any confusion. One way is using aligning your timetable with all the stakeholders. Your production body of workers ought to be aware of critical time limits like ready-by dates and shipping dates with the aid of placing and managing expectations.

Conclusion

On-time delivery is a core focus for today's businesses. Knowing OTIF KPI, its Importance, and how it measures and calculates is essential to being competitive in today's market. As an eCommerce business owner, incorporating OTIF as part of your key performance indicators can help drive success in your eCommerce initiatives by ensuring products are delivered on time - every time. Need help fulfilling eCommerce orders? Get in touch with Simpl Fulfillment – a leading provider of end-to-end order fulfillment services that guarantees on-time delivery for all customers, big or small.

‍

Recommended: 8 Supply Chain Metrics & KPIs You Need For A Successful Business