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.
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:
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:
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.
Optimizing your order operations to boost OTIF performance delivers immense value by:
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.
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.
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.
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.
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.
Businesses may struggle to overcome various barriers to reliably meeting on-time, in-full delivery targets. The most common obstacles include:
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:
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.
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:
Learn more about how leveraging Conexiom's document automation solutions can enhance your OTIF benchmarks in our 2024 Manufacturing and Distribution Benchmark Report.