Meeting OTIF Benchmarks and Optimizing Your Order Process

In the fast-paced world of B2B, receiving the right product, in the right quantity, at the right time is no longer a nice perk for your customers — it's an expectation. However, in the face of rising supply chain complexity and constantly evolving external disruptions, achieving on-time in-full targets is easier said than done.

Establishing and measuring OTIF (on-time, in-full) benchmarks are essential to improving your performance. Read on to discover battle-tested strategies for meeting OTIF benchmarks, creating responsive processes, and leveraging technology to exceed expectations.

What Are OTIF Benchmarks?

OTIF benchmarks are crucial delivery metrics that quantify the percentage of shipments that reach customers by the confirmed delivery date, with every item in the perfect condition and correct quantity.

On-time measures the percentage of orders delivered to customers within the agreed window, while in-full refers to shipments that arrive without missing, damaged, or incorrect items.

An OTIF benchmark is a target delivery rate that shows your ability to meet customer expectations consistently. This percentage is directly tied to satisfaction, loyalty, and operational performance.

Setting OTIF benchmarks and monitoring your performance allows you to:

• Get a high-level view of overall order fulfillment effectiveness
• Assess the reliability of your order/delivery feedback loops
• Decrease customer churn, returns, and expedited shipping costs
• Identify specific products, customers, or channels causing the most delays or errors
• Track the impact of process changes and improvements

How to Calculate OTIF Benchmarks

When getting started with OTIF metrics, the first step is to determine what data you need to track. At a minimum, you should capture the following for each order:

• Order number
• Promised delivery date
• Actual delivery date
• Complete/incomplete status
• Damaged/missing item status

With this data, you can calculate your overall OTIF performance.

The basic formula looks like this:

(Number of orders you have delivered on time and in full / Total number of orders) x 100 = OTIF Percentage

For example, if you fulfilled 425 orders in one particular month, and 350 of them were delivered on time and with all items intact, your calculations would be:

Number of on-time, complete orders = 350

Total orders last month = 425

OTIF Percentage calculation: (350 / 425) x 100, = 82%

So, 82% of your orders met the on-time and in-full criteria. The set OTIF benchmark for your company might be 95%, indicating that improvements are still needed to meet your delivery commitments consistently.

For a more accurate perspective, you can also break the metrics down in more detail to identify problem areas. For example, you could calculate your OTIF percentage by product line, customer geography, sales channel, etc. The goal is to pinpoint where delays or defects are most common so you can address root causes.

The Business Case for Improving OTIF Benchmarks

Optimizing your order operations to boost OTIF performance delivers immense value by:

• Improving customer satisfaction

Meeting delivery commitments consistently builds customer satisfaction and prevents lost sales. Around 10% of businesses state that system limitations pose the biggest challenge to fulfilling orders and pleasing customers. What’s more, 34% have experienced customer churn directly due to order errors. By optimizing processes to improve OTIF, you can protect both revenue and relationships.

• Avoiding financial penalties

Many larger contracts include OTIF requirements, with penalties for non-compliance. Identifying and resolving process gaps enables you to meet these terms and avoid negative impacts. Even without formal penalties, failing to meet delivery targets can result in concession payouts to retain customers.

• Preventing expensive order errors

On average, a single B2B order error costs over $18,000 to rectify when factoring in transportation, labor, and the impact on customer experience. Improving quality assurance, inventory accuracy, shipment checking, and other areas helps cut these expensive error rates.

• Driving continuous improvement

Whether implementing new technology, updating processes, or training staff, tracking OTIF benchmarks over time provides a tangible way to assess the business impact of changes.

OTIF Benchmarks and Targets

The specific OTIF benchmarks to aim for can vary substantially based on factors like industry, product type, delivery mode, and order urgency or change over time.

For instance, Walmart has been aggressively increasing OTIF expectations for its suppliers — from 75% in 2017 to 98% in 2020. Retailers often impose financial consequences for non-compliance with their target OTIF rate, sometimes charging up to 3% of the cost of goods as a penalty.

As customer expectations around speed and reliability continue to rise, achieving OTIF rates of 95%+ represents best-in-class order accuracy and on-time delivery and is the lowest benchmark that your business should be aiming for.

Challenges in Meeting High OTIF Benchmarks and On-Time, In-Full Deliveries

Businesses may struggle to overcome various barriers to reliably meeting on-time, in-full delivery targets. The most common obstacles include:

• Manual data entry from paper orders: This can lead to 200% more mistakes than digital orders, such as inaccurate quantities, pricing, or delivery dates. Fixing errors is time-consuming, expensive, and harms your OTIF metrics.

• Slow processing times: Manual order extraction, interpretation, and data re-keying between systems leads to 28% more late shipments. Employees get bogged down transferring information instead of engaging in more valuable work.

• Lack of real-time visibility: With manual status tracking, there are no prompt updates on order changes, inventory levels, or delays. Due to information lag, 59% of suppliers fail to notify customers quickly.

• Lost paperwork and documents: When order details or signed approvals get buried, misfiled, or misplaced, shipments stall, and OTIF compliance decreases. Human error exacerbates document management problems.

• Siloed systems and processes: Disconnected tools, spreadsheets, and software make it hard to seamlessly access and share the latest data on customers, products, inventory, and orders across teams.

• Difficulty identifying and resolving issues: Without interconnected systems and data flows, discrepancies can go undetected, so problems persist rather than being immediately addressed by automated exception handling.
• Supply chain coordination troubles: Complex multi-party supply chains mean more friction points and delays. Lack of end-to-end transparency prevents proactive mitigation when issues arise.

Solutions to Match OTIF Benchmarks in On-Time, In-Full Deliveries

The solution to setting high OTIF benchmarks is by upgrading to modern, integrated software. These systems will dramatically improve your business’s ability to meet on-time, in-full delivery targets reliably. The key capabilities to look for include:

• Automated document processing with AI/ML: Automated data processing enables you to instantly extract order details from paper and PDF documents with up to 100% data accuracy, avoiding manual entry errors. This speeds up order fulfillment.

• Accelerated order processing: Automation reduces the time spent re-entering data between systems, enabling faster picking, packing, and shipping to maximize on-time delivery.

• Real-time visibility and notifications: Integrated order, inventory, and tracking data provide instant access to shipment status updates across departments and enable prompt notifications to customers.

• Digitization to prevent document loss: With automated data extraction and electronic storage, paperwork is never misplaced or buried, and details remain accessible for accurate fulfillment and compliance requirements.

• Elimination of data silos through system integration: Connectivity with ERPs, CRMs, WMSs, and other platforms ensures unified data flows across sales, operations, and finance for efficient order orchestration.

• Automated workflows and exception management: Rules-based workflows flag and resolve discrepancies for proactive OTIF performance management rather than reacting post-issue.

• Enhanced supply chain collaboration: Smooth, digital communication with customers, carriers, and suppliers fosters transparency and coordination regarding potential delays.

• Advanced warehouse automation technologies: Barcode scanning, RFID, pick-to-light systems, and AS/RS robots optimize inventory accuracy and storage/retrieval to minimize mistakes.

Conexiom's order automation enabled Rexel to refocus employee efforts on strategic initiatives that increase customer satisfaction and loyalty. Automating order processing removed the costs of errors and rework resulting from manual entry.

Discover How Conexiom Can Help You Meet Your OTIF Benchmarks

Achieving 95%+ OTIF rates is essential for customer satisfaction, revenue growth, and supply chain excellence. However, disjointed processes, lost documents, siloed data, and manual efforts can cause persistent challenges. Conexiom's AI-powered platform presents a smarter solution.

Conexiom seamlessly automates the capture and processing of orders, approvals, and other business-critical documents. The platform’s key benefits include:

• 100% accurate data extraction and elimination of errors
• Near real-time order visibility for proactive issue resolution
• Accelerated document handling cycle times
• Employee time freed up for more strategic, value-added work

Learn more about how leveraging Conexiom's document automation solutions can enhance your OTIF benchmarks in our 2024 Manufacturing and Distribution Benchmark Report.