An e-commerce firm has numerous moving pieces. Keeping track of the myriad aspects that affect the supply chain might be difficult, but it is essential for effective performance.
Ecommerce companies must regularly evaluate their performance across the supply chain in order to optimize their operations and boost efficiency. This includes tracking crucial distribution data such as how many orders were delivered out on schedule since this is critical in determining how effective their operations are, how pleased consumers will be, and whether they need to make adjustments.
In this article, we’ll look at the On-Time In-Full (OTIF) measure and why it’s significant for e-commerce enterprises. We also teach you when and how to compute your OTIF score, as well as how to enhance it.
OTIF Definition
OTIF, or On-Time In-Full, is a key performance indicator that measures how many orders were fulfilled on time and in full. It is useful in determining if the company was able to deliver every item in the order on or before the scheduled delivery date. This statistic is mostly utilized as a delivery KPI, although it may be used across the supply chain. For example, you may use OTIF picking or OTIF dispatch to evaluate various areas of your fulfillment process.
Importance of OTIF in E-commerce Companies
OTIF is an important indicator to monitor since it helps e-commerce companies determine the effectiveness of their fulfillment and delivery processes. OTIF monitors how well a brand’s shipping partners perform in terms of on-time delivery. It also entails determining if fulfillment procedures such as receiving, selecting, packing, and shipping are efficient enough to deliver orders in full as rapidly as possible.
When combined with other KPIs and reports, OTIF may provide a comprehensive picture of how various supply chain processes are working and what needs to be improved. A poor OTIF score, for example, might be the result of stockouts and supply chain interruptions. In this scenario, negative customer feedback regarding a product not being available or not being delivered are possible. High stockout costs paired with poor OTIF scores might also aid in the identification of the source.
OTIF Has a Greater Influence Than You Would Believe
The OTIF measure is used for more than just monitoring delivery performance. It is inextricably linked to other parts of your supply chain and overall success.
A solid OTIF score begins with the acquisition and procurement of suppliers. Your clients’ orders should be in stock and ready to ship. Otherwise, delivery delays will occur, affecting your OTIF figure.
Even if you have enough inventory on hand, you might still have a poor OTIF score owing to warehousing and storage concerns. Delays might be caused by inefficient selection procedures and worker shortages. Furthermore, how you store and manage inventory might affect the pace of fulfillment, which in turn affects your OTIF score.
OTIF is an important statistic for assessing the shipping experience provided by your company. For this figure to be higher, your carrier must be able to deliver the things on schedule and in good condition. Slow delivery speeds, in-transit damage, and a lack of carrier order monitoring can all have an effect on your OTIF figure and, as a result, the whole shipping experience.
Customer satisfaction is one of the most important aspects of OTIF. Low OTIF scores are often associated with low customer satisfaction scores since consumers do not get their entire purchases on time.
OTIF Computation
The technique of calculating your OTIF rate is straightforward. It entails counting the total number of on-time and full deliveries and dividing the total number of deliveries by the total number of deliveries. You may use the following formula:
Total deliveries made on time and in full / Total deliveries made X 100 = On-Time In-Full Rate
When Is The Right Time To Monitor OTIF as KPI?
If you aren’t already tracking your OTIF score, now could be a good time to start. When you see any of the following difficulties, it’s time to start tracking OTIF as a KPI:
- Late Deliveries
Are you receiving a high volume of calls from consumers inquiring about/complaining about delayed orders? Perhaps your review area is filling up with people who haven’t received their orders yet. Perhaps you’ve seen an increase in email complaints about delivery delays. Or perhaps a recent feedback study found that your delayed delivery times were the primary source of client dissatisfaction.
Recurring problems Late deliveries or a rise in delivery delays indicate that your OTIF needs to be regularly monitored. It might be a supplier issue, where manufacturing is taking longer than normal and there are many backlogged orders. It’s possible that your cargo provider is taking longer than normal to finish last-mile deliveries.
- Wrong Orders
Your feedback and customer service inquiries may disclose a serious problem with your order accuracy rate. How many consumers have complained about obtaining the incorrect product size? Is there a problem with obtaining anything in a different color? Is there any evidence of buyers obtaining an item that is entirely different from what they ordered?
This not only affects your perfect order stats, but it also indicates that it’s past time to start tracking your OTIF score. A high rate of incorrect orders may indicate an issue with your warehousing and picking processes, which will damage your OTIF rate.
- Inadequate Inventory Visibility
Are you having trouble obtaining accurate inventory visibility throughout your supply chain and fulfillment network? When you don’t have accurate inventory visibility, you’re more likely to have stockouts, backorders, split shipments, and fulfillment delays. For example, you may frequently encounter problems with things being unavailable when your customers order them. Alternatively, you may be required to send out various goods from the same order in numerous shipments on a regular basis.
These challenges can therefore have an effect on your OTIF rate since orders are either not delivered on time or are not dispatched in full. If you don’t have enough inventory visibility, it’s time to examine your OTIF score.
These challenges can therefore have an impact on your OTIF rate since items are either not delivered on time or are not supplied in whole. So, if you don’t have enough inventory visibility, it’s time to look at your OTIF score.
Problems with Warehouse Processing
Another clue that you need to take action is if you are always experiencing problems with your warehouse processing. For example, if you don’t have an automated warehouse receiving system in place, it might take a long time for your warehouse to receive orders once they’ve been placed. And this will very certainly create a delay in order fulfillment.
If you don’t have a comprehensive warehouse inventory management system, you may have difficulty tracking inventory movement and properly choosing orders. Furthermore, your warehouse management process may be hampered by poorly-trained employees, staff shortages, ineffective task planning, and inefficient storage methods.
How To Enhance OTIF Score?
If your supply chain analytics indicate that your OTIF score is deficient, here are some suggestions to assist you improve your numbers:
- Putting in Place A Warehouse Management System
A good warehouse management system may increase inventory visibility while also making warehouse procedures more efficient. It keeps track of your inventory levels and connects with your e-commerce business to maintain stock levels up to current in real-time. This lowers mistakes and accelerates the fulfillment process while increasing order accuracy rates. Furthermore, increased insight into where certain SKUs are housed will speed up picking and increase order fulfillment rates.
- Real-time Order Data Analysis
A solid order management system is also required to examine order data in real time. This helps you to expedite order processing by transferring client order data from your e-commerce shop to your warehouse automatically. With real-time inventory data, you can minimize stockouts, replenish when necessary, and maintain optimal inventory levels across your distribution network.
- Inventory Distribution for Speedy Delivery
Many deliveries are delayed because packages must travel long distances to reach their destination. By distributing your inventory over many fulfillment centers, you may keep your goods closer to your clients, resulting in orders traversing fewer distances to their eventual destination. This is a good method for increasing your OTIF score while also delivering orders more quickly.
- Automation for Better Accuracy Numbers
Many activities in your supply chain may be automated for accuracy, from order processing through fulfillment and shipment. Automated order processing transmits order data to your warehouses instantly, eliminating the need for manual entry and hence human mistakes. Meanwhile, inventory automation provides real-time inventory level updates, allowing you to maintain ideal stock levels at all times and avoid stockouts and backorders.
When you automate your fulfillment, you may also enhance accuracy in the picking, packaging, and shipping processes. This includes warehouse automation to decrease the number of decisions that a warehouse associate must make and eliminate picking and packaging mistakes. It also entails automating your shipment by automatically placing orders in the fulfillment queue and establishing an automated tracking system.
- Putting Order Tracking Software in Place
Getting real-time updates on order progress helps boost visibility across the board. By keeping track of how your shipments are progressing, you may swiftly follow up with the carrier in the event of a delay and strive to resolve the situation.
- Optimizing Order Fulfillment Procedures On A Regular Basis
On a regular basis, your order fulfillment procedures should be inspected and optimized. This might include investing in new technology or implementing improved procedures based on employee input. Look for places that are producing backlogs and delays all the time so you can work on correcting them.
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