What is OTIF?

What is OTIF?

OTIF, short for On-Time In-Full, is a supply chain management metric to measure how well a business can deliver orders to the agreed upon date, and in the correct quantities. It focuses on measuring timeliness, accuracy, and delivery completeness, ensuring orders are delivered on the agreed-upon date and in the correct quantity.

OTIF also has a role as a key performance indicator (KPI) for measuring supplier relationships and making procurement decisions. This metric enhances supply chain visibility and helps serve the customer well by being efficient in order fulfilment.

What are the Factors Affecting OTIF?

Inventory management, poor communication, delivery routing issues, supplier relationship, lead time variability, outdated systems, external conditions like weather etc. are the factors that, impacting order fulfilment and demand planning success and affecting supply chain OTIF.

 Order Fulfilment Challenges:

Poor inventory management, inefficient routing, as well as data errors are some order fulfilment challenges that impact the OTIF supply chain performance. With these issues, stock-out, backorder or cost increases may result, disrupting demand planning. To achieve order fulfilment and maintain supply chain visibility without communication gaps and external factors, such as weather, is necessary.

Outdated Order Tracking Systems:

Older tracking systems prevent OTIF performance by delaying order processing, preventing real time supply chain visibility, and inaccurate data. These inefficiencies lead to a compromise of order fulfilment, delay of decision-making, and customer dissatisfaction. In upgrading tracking systems, we can have better demand planning and better logistics performance in general.

Stakeholder Involvement:

The involvement of active stakeholders improves OTIF supply chain outcomes by the promotion of collaboration, communication and responsibility. Priorities are misaligned and coordination is poor, causing delivery schedules to be disrupted and order fulfilment to be impacted. To maintain high OTIF score, supplier relationships have to be strengthened and goals aligned.

 Manufacturing Lead Times:

OTIF supply chain performance is directly affected by manufacturing lead times as they disrupt delivery schedules and demand planning. Effective inventory management also provides material availability and reduces delays for timely fulfilment. Streamlining lead times by strengthening supplier relationships and variability management will improve OTIF metrics.

Weather and Seasonality:

Transport delays, supply chain disruptions and demand fluctuations impact OTIF, which are caused by weather and seasonality. Planning mitigates risks, and helps to better demand planning, and improve order fulfilment. Lack of preparedness results in inventory shortage and deteriorates overall OTIF supply chain performance.

 What is the Difference between OTIF and OTD?

OTIF is concerned with timely and complete deliveries, OTD only with timing. Delivery accuracy and completeness are part of OTIF supply chain metrics, that being more comprehensive. OTIF is evaluating supply chain performance end to end, while OTD focuses more on logistical punctuality. Together these provide critical insights into supply chain efficiency, reliability and order fulfilment success.

 Importance of OTIF in Supply Chain Management:

Supply chain management is championed by OTIF (On-Time In-Full) for customer satisfaction, operational efficiency, and financial performance. It analyses inefficiencies in inventory management and demand planning, reduces costs, and aligns performance with industry standards. OTIF supply chain provides a strong line of OTIF deliveries on time.

How to Measure OTIF?

OTIF measurement is based on industry standards, benchmarking, historical data and internal targets. Inventory management, order fulfilment improves when goals are set based on strategic objectives and are realistic. The use of this systematic approach will strengthen supplier relationships and improve overall OTIF supply chain performance.

OTIF Formula:

The OTIF formula is calculated as: (Number of orders delivered on time and in full / Total orders) × 100. This metric evaluates order fulfilment efficiency, with scores of 95% or higher considered excellent across diverse industries.

OTIF Calculations:

OTIF supply chain calculations divides the timely and complete deliveries by total deliveries and multiplies that figure by 100 to assess the delivery performance. A score of high means that the organization has good logistics and inventory management, which is an indication of good demand planning strategy. These calculations also pinpoint areas for improvement, thus improving supplier relationships and supply chain visibility on an ongoing basis.

How can we Improve On-Time and In-Full Score?

To improve OTIF, the production and transportation schedules need to be aligned, inventory management should be enhanced, supplier relationships strengthened, real time tracking used, supply chain visibility optimised, logistics streamlined for improved order fulfilment and demand planning.

Align Production and Transportation Schedules:

Optimizing the production and transportation schedules improves OTIF supply chain performance by bringing the demand planning and real time tracking for visibility together. Supplier relationships are strengthened, and logistics is continuously analysed for order fulfilment so as not to delay.

 Implement a Warehouse Management System:

The Warehouse Management System (WMS) helps improve inventory management, enables real time tracking, and reduces lead times, which are all positive factors for OTIF supply chain metrics. Coordination is streamlined and issues are proactively managed to increase overall order fulfilment efficiency.

Distribute Inventory for Faster Delivery:

By strategically distributing inventory, OTIF supply chain outcomes are improved through optimising demand planning and logistics planning. Faster delivery is achieved through real time tracking and strong supplier relationships to improve order fulfilment capabilities.

Renegotiate Minimum Order Quantities and Cadence:

Improving OTIF supply chain performance is achieved through renegotiating MOQs, which have a positive effect on inventory management as well as on surplus risks. Demand planning is supported by collaborative strategies with suppliers to optimize order fulfilment and on time deliveries.

FAQs

1. What is OTIF?

OTIF, short for On-Time In-Full, is a supply chain management metric to measure how good a business can deliver orders focusing mainly on measuring timeliness, accuracy, and delivery completeness, ensuring orders are delivered on the agreed-upon date and in the correct quantity.

2. What is the difference between OTIF and OTD?

OTIF evaluates delivery timeliness and order completeness, while OTD focuses only on timing. OTIF supply chain metrics are more comprehensive, addressing accuracy and completeness, offering deeper insights into order fulfilment and supply chain efficiency.

3. What are the Factors Affecting OTIF?

Factors affecting OTIF supply chain include inventory management, poor communication, delivery routing issues, supplier relationships, lead time variability, outdated systems, and external conditions like weather, impacting order fulfilment and demand planning success.

4. How can we improve on time and in full score?

Improving OTIF involves aligning production and transportation schedules, enhancing inventory management, strengthening supplier relationships, using real-time tracking, optimising supply chain visibility, and streamlining logistics for better order fulfilment and demand planning outcomes.