What is OTIF?
OTIF stands for “On Time & In Full” and is the next step for big retailers. With OTIF, you now need to deliver your products within a 1-day window (on the exact date) — and it must be the full purchase order. Walmart recently announced new OTIF guidelines for suppliers. OTIF is applicable in almost all industries, such as manufacturing and services, in both B2B and B2C businesses.
How do I measure OTIF?
The OTIF calculation often varies depending on the organization’s goals. However, there are some common characteristics. The OTIF definition consists of two parts – on time and in full. It refers to the KPI measuring the efficiency and accuracy of delivery or logistics in the supply chain.
OTIF formulas
In Full = (Delivered amount) – (Confirmed amount)
On Time = (Delivery time) – (Confirmed delivery time)
On Time In Full = (Cases matching the criteria) / (Total number of cases)
Why is OTIF important?
OTIF helps determine how efficiently you are meeting our customer’s or agreed deadlines. It is one of the best ways for an organization to acquire some perspective into customer satisfaction with concern to their supply chain performance. To improve OTIF scores it is essential to chalk out a well-planned roadmap for improving supply chain performance. OTIF optimization is crucial from a supply chain perspective, as a critical breakdown at one point in the supply chain can adversely impact revenue and more importantly customer satisfaction. For example: Walmart announced that they would be implementing new OTIF guidelines that moved from a 4-day OTIF to a 1-day OTIF. They did this to keep shelves stocked and to reduced products that were overstocked, early and late deliveries will result in a fine to the supplier.
How to improve your OTIF
Awareness is the most important. Understanding why your OTIF score is low is a good place to begin, think about where there might be bottlenecks, processes that can be automated, and making sure you have accurate KPI’s. Be sure to become familiar with your OTIF scorecard. It has detailed information about where you currently stand regarding on time and in full and you will be able to see what is driving your individual OTIF data results. You can determinate if any deficiencies are a result of a distribution center issue, a receiving issue, or a shipping issue.
Tips for meeting OTIF requirements as a supplier:
- Prioritize appointment scheduling. Provide as much information and lead time as possible to your partners so that rejections or delays are prevented.
- Ensure good communication for all your carriers and ship locations to make sure they aware of the newly established OTIF processes. Educating them on the stricter expectations will ensure they understand the importance of being on schedule.
- Make sure your production team understands the new OTIF rules. Make sure they are aware of consequences and that absolute ship dates cannot be changed.
- If your order changes, be sure to that your shippers contact and update their buyers to ensure correct delivery dates and quantities are reflected in the retail scorecard. This is not a new change but now has stricter consequences for specific retailers if not followed.
- If you reschedule a delivery, be sure to ask or check if the new date/time falls within the retail MABD. Just because an appointment is approved, that does not mean it is compliant.
- Utilize visibility tools so that you can better plan ship dates and to help you meet OTIF standards. Work to schedule contracted carriers and set transit days/times so that there is as little flux as possible.
- Work with a logistics partner who has a strong track record for on-time delivery to big-box retailers.
At MVP Logistics we can analyze your supply chain to address OTIF for your business. Our logistics experts have the time, resources, and expertise to hit deadlines, problem solve, provide visibility, and identify new opportunities as they come.
MVP Logistics is your 3PL logistics partner for supply chain project management, logistics, warehousing and fulfillment, LTL, and other supply chain needs. Our Minneapolis, Houston, and Los Angeles area warehouses provides local, national, and international shipping services. Find your solution today.
