What (If any) tolerance levels does your organization use for Measuring On-Time Delivery?
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I fully agree, Lindsey Walker; the OTD/OTIF customer viewpoint differs slightly. We want to be above 95%, ideally. <br><br>Those new to this KPI start with your baseline, then measure from there, making it a step-up function over time. Continually improve with Pareto's and the root cause, and corrective action on addressing the miss. The logic can be applied to both supplier-driven and fulfilling orders.
Assuming we are talking about On-Time delivery to customers. We are a chemical manufacturer serving a wide variety of markets (B2B customers) with different mode of transports (Road, Rail, Sea & Air) we would like to ensure that our OTD/OTIF is representative<br><br>Example of our suggested On-time tolerances by mode: <br>Road: -+1 day <br>Air ≤ + 1 day <br>Rail -+3 days <br>Ocean -7/+3 days<br><br>Does this look representative and could be benchmarked?<br><br>
This depends on what you want as an organization to drive and how you want to hold your supply partners accountable. Typically, tolerances can vary as x days early and y days late calendar days (Ex. -5 days before and two days late).
Hi Mohammad, we are in the process of reviewing on time tolerances and I struggle to find a rationale to include them<br>From my perspective, late deliveries tolerances should be 0 as once you share with your customer the delivery date, their expectations is that as clients we meet them but this is not everyone's view in the organization<br>How did you come with this ranges?<br>Many thanks!
Hi Toni, <br>The end Customer should be on time or early. Late is never good. However, this context was for incoming materials to build your widget.
If we're talking about On-Time Delivery to customers, I would say this varies significantly by business based on customer requirements and is usually determined by their compliance fine structure. For example, if you are selling into big box retail, a common expectation is a 98% OTIF. Wholesale distribution might have a slightly lower target (often in my experience between 90-95%).
If we're talking about On-Time Delivery from vendors, I agree with Mohammad Saim.