What are the best practices for measuring on-time delivery KPIs?

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On-time delivery (OTD) is a key performance indicator (KPI) that measures how well a logistics provider or a supply chain partner fulfills customer orders within the agreed time frame. OTD is a crucial metric for customer satisfaction, loyalty, and retention, as well as for operational efficiency, cost reduction, and competitive advantage. However, measuring OTD can be challenging, as different customers may have different expectations, definitions, and methods of calculating OTD. Therefore, it is important to follow some best practices for measuring OTD KPIs to ensure accuracy, consistency, and relevance.

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Mohamed Elkhatim Hamada Abdelazim

|Supply Chain Professional| |Earthmoving Equipment Expert| |Mechanical Engineer|
Eman Abouzeid

Global Procurement, Logistics and Supply Chain Operations Expert | TOP 100 Most Influential Supply Chain Woman in Africa
William Ferreira de Souza Baptista

Líder de Equipe de Engenharia na Volkswagen Group Services - Portugal | Especialista em Engenharia Industrial

1 Define OTD criteria and targets

The first step in measuring OTD KPIs is to define the criteria and targets for OTD. This means clarifying what counts as on-time, late, or early delivery, and what are the acceptable tolerances or deviations from the agreed time frame. For example, some customers may consider a delivery on-time if it arrives within a certain window before or after the due date, while others may require a delivery to arrive exactly on the due date. Similarly, some customers may have different OTD targets for different products, regions, or seasons. Therefore, it is essential to align the OTD criteria and targets with the customer expectations and contract terms, and to communicate them clearly to all the parties involved in the delivery process.

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Mohamed Elkhatim Hamada Abdelazim

|Supply Chain Professional| |Earthmoving Equipment Expert| |Mechanical Engineer|
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I agree and also setting realistic on-time delivery targets is crucial for various reasons. It not only ensures customer satisfaction, builds credibility, and promotes operational efficiency but also plays a significant role in maintaining high employee morale. Realistic targets contribute to a healthier work environment by preventing overburdening your team with unattainable goals. This, in turn, reduces stress, fosters job satisfaction, and encourages a positive workplace culture. Happy and motivated employees are more likely to contribute to the overall success of your business and provide better service to customers.

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Eman Abouzeid

Global Procurement, Logistics and Supply Chain Operations Expert | TOP 100 Most Influential Supply Chain Woman in Africa
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On-time delivery KPIs used to determine if the organisation is meeting the timely delivery goals or not. The best practices for measuring on-time delivery KPIs: 1) Be sure to set clear goals and communicate delivery expectations to customers, suppliers, and internal teams to help ensure timely delivery. 2) Review and optimize your current supply chain processes by identifying inefficiencies in the system that are contributing to delays. 3) Utilize technology, delivery tracking and route planning software, to monitor the status of deliveries. 4) Use smart packaging techniques. 5) Implement contingency plans to deal with unexpected events. 6) Regularly measure and analyse on-time delivery metrics to identify areas for improvement.

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Damian Leal

Operations Manager at SeaSpine
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Have a plan of action when you miss your OTD targets. * Identify areas of concern * Are your targets realistic? * Set a plan for correction. Assign owners to address missed target content * Set a timeline for correction

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Mario Carmona

The Swatch Group Mexico
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El OTD nos ayuda a medir el desempe?o Logístico sin embargo ya no es suficiente solo medir entregas en tiempo. Para eso podemos medir OTIF (On Time in Ful) que nos permite medir que llegue en tiempo y que la orden cumpla con lo solicitado.

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Fadhel Mishan

MISE, SCTL, Packaging Engineer at TWL Boeing | Ex-Amazonian
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1. Clearly Define What On-Time Delivery Means: o Establish a clear definition of “what on-time delivery” for your company. This definition might vary based on customer expectations, industry standards, or contractual agreements. 2. Set Realistic Delivery Timeframes: o Establish realistic delivery timeframes that consider such as production lead times, transportation times, and potential delays. Also, ensure deadlines are aligned with customer expectations. 3. Use Key KPIs: o Be specific about which KPIs are needed to measure on-time delivery, such as On-Time In-Full (OTIF) performance, Perfect Order Rate, and delivery time accuracy. These metrics provide a quantitative measure of your delivery performance.

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2 Choose an OTD formula and method

When measuring OTD KPIs, you must choose a formula and a method for calculating OTD. The formula is the mathematical expression that determines the calculation, while the method is the data source and process that provides the inputs. Depending on the type of delivery, level of detail, and data availability, different OTD formulas and methods can be used. For example, some common OTD formulas are (Number of on-time deliveries / Total number of deliveries) x 100; (Number of on-time deliveries / (Total number of deliveries - Number of canceled orders)) x 100; and (Number of on-time deliveries / (Total number of deliveries - Number of canceled orders - Number of exceptions)) x 100. Additionally, some common OTD methods are using the actual delivery date and time recorded by the carrier or customer; using the planned delivery date and time generated by the logistics provider or supply chain partner; and using the confirmed delivery date and time agreed by the customer and logistics provider or supply chain partner. Ultimately, when selecting an OTD formula and method, consider the criteria and targets, data accuracy and reliability, as well as ease of calculation and reporting.

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Elias Gaouro

Procurement @ Airbus ?? MIT ? McGill
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It is important to choose an OD formula that fits your business needs. While you can start with a standard formula, it's crucial to adapt it to your unique requirements.

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William Ferreira de Souza Baptista

Líder de Equipe de Engenharia na Volkswagen Group Services - Portugal | Especialista em Engenharia Industrial
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Quando se trata de medir KPIs OTD, a escolha cuidadosa da fórmula e do método de cálculo é essencial. A fórmula, que é a express?o matemática definindo o cálculo, e o método, que representa a fonte de dados e o processo de entrada, desempenham papéis cruciais nesse processo. A flexibilidade é evidente, pois diferentes fórmulas e métodos OTD podem ser aplicados, dependendo do tipo de entrega, nível de detalhe e disponibilidade de dados.

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Sebastian Vom Feld

Head of SAP & Sales Controlling bei Interroll F?rdertechnik GmbH
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Man ben?tigt zun?chst den kompletten Datenstrang übergreifend von seinem eigenem System bis hin zu POD abgezeichnet bei der Anlieferadresse. Nun gibt es viele Wege die nach Rom führen, um die richtige KPI für sein eigenes Unternehmen und Produkt zu finden. Die wertvollste KPI steht immer im Zusammenhang mit dem Kundenwunsch. Somit sollten sich alle KPIs zu OTD immer nach dem Kundenwunschtermin richten. Misst man OTD intern, gelten selbstverst?ndlich andere Termin als Basis.

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Mukesh Dadhich

logistics Analyst and operation
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First of all need to decide SLA for particular unloading point after takin all criteria like journy time loading time driver sleep etc. Than need to track based on GPS in what time duration fleet hits the geofance of that party/unloading point.

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Weber Nelson Augusto

Consultor de custos Industriais na WE Consultoria | Auditor ISO TS 16949
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Excelente, assunto que hoje t?o importante, impactando e que significa o poder de criar e fazer com que as coisas sejam gloriosas.

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3 Track and analyze OTD data

The final step in measuring OTD KPIs is to track and analyze the OTD data. This means collecting, storing, and processing the OTD data from various sources, such as order management systems, transport management systems, carrier tracking systems, customer feedback systems, etc. The OTD data should be tracked and analyzed regularly, preferably in real-time or near real-time, to monitor the delivery performance and identify any issues or opportunities for improvement. The OTD data should also be segmented and aggregated by different dimensions, such as product, customer, region, carrier, time period, etc., to provide more insights and comparisons. The OTD data should be presented in a clear and concise way, using visual tools such as dashboards, charts, graphs, etc., to communicate the OTD results and trends to the relevant stakeholders.

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Josué Casco Flores

Consultor de Logística en varias entidades
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Al ser un indicador que sirve para medir pedidos de entrega al cliente, no debemos de perder la objetividad que vivimos en una nueva Logística, donde parece que reducir los tiempos de entrega se vuelve una de las metas de las empresas, pero la pregunta sería, ?A qué costó tenemos que llegar para poder cumplir con éste objetivo?

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Weber Nelson Augusto

Consultor de custos Industriais na WE Consultoria | Auditor ISO TS 16949
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Acredito que poder ter informa??es, localiza??o promover seguran?a ao colaborador, aocliente e ao negócio pode fazer e trazer o melhor resultado.

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RICARDO MARTINEZ BATISTA
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Totalmente de acuerdo con el seguimiento del histórico de datos de OTD podemos mejorar nuestros procesos y adaptarnos a las necesidades de nuestros clientes

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Miguel Rincón Zú?iga

Airfreight Operations & Customer Service MEX en Dietrich-Logistics, S. de R.L. de C.V.
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Tener un ERP ayuda bastante en nuestra empresa, pero una capacitación objetiva, humana y en busca de mejora contunua, debemos ser capaces de concientizar al personal para ser claro, objetivo y ense?ar porque necesitamos tener datos claros y confiables.

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Jhen Michael Cabrera Gonzales

Lic Administrador/Especialista en SCM/Comercial B2C/Consultor/hidrocarburos
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El just in time, es muy versátil dependiendo de la zona; es muy importante tener claro distintos factores, ya que unos pueden ser planificados(como los oleajes en un terminal portuario) y otro por el tráfico en la ruta. En mi experiencia, la información del proveedor es vital para mantener el tiempo estipulado al cliente, también se debe tomar en cuenta los factores tecnológicos como lo son( el GPS, Waze, Google Maps ). En el Perú Solo un control de seguimiento constante te permite cumplir con los objetivos de tiempo de entrega.

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4 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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William Ferreira de Souza Baptista

Líder de Equipe de Engenharia na Volkswagen Group Services - Portugal | Especialista em Engenharia Industrial
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Os KPIs (Key Performance Indicators) da On-Time Delivery (OTD), ou Pontualidade na Entrega, s?o métricas essenciais para avaliar o desempenho e eficiência no cumprimento dos prazos de entrega. Alguns KPIs comuns associados à OTD incluem: 1-Percentual de Entregas no Prazo 2-Percentual de Entregas no Prazo Descontando Pedidos Cancelados 3-Percentual de Entregas no Prazo Descontando Pedidos Cancelados e Exce??es 4-Tempo Médio de Entrega 5-Taxa de Cumprimento do Prazo por Produto/Cliente/Regi?o 6-Número de Entregas Atrasadas ou com Exce??es 7-índice de Desempenho do Fornecedor Ao implementar e monitorar esses KPIs, as empresas podem identificar áreas de melhoria, tomar decis?es informadas e se destacar perante concorrentes.

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Carlos Tocon
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Algunos tips que me han funcionado: 1. Definir los niveles de servicio de entregas hacia con los clientes internos y externos. 2. Metas y objetivos medibles y alcanzables. 3. Relación ventas vs satisfacción de los clientes. 4. Posicionamiento de marca, entre las mejores empresas que cumple en tiempo y forma.

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Weber Nelson Augusto

Consultor de custos Industriais na WE Consultoria | Auditor ISO TS 16949
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Tudo que foi postado pode ser quantificado como foco, com certeza poderá melhorar o conhecimento do leitor e seguidores. Parabéns

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Karen Glass

UPS RETIRED....
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They give Hopeful insights to better days/times....?? Memories of times forgotten?? or ones not ever known.... Greetings to a lonely person??? not everyone is attempting networking for Business... It's insightful to remind one be MINDFUL WHO YOU WANT TO BE IN "BUSINESS" WITH... ?? Also a space for an occasional moron to write... So they feel left out!! ?? Because they're out there in droves????

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Miguel Tejeda

Subgerente de Supply Chain | Last Mile | Continuous improvement | Ecommerce
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Evaluación constante de satisfacción del cliente. Validación vs lo prometido ante el cliente. Capacidad de cumplimiento ante los requerimientos del cliente. Son algunos indicadores importantes.

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What are the best practices for measuring on-time delivery KPIs?

1

2

3

4

1 Define OTD criteria and targets

2 Choose an OTD formula and method

3 Track and analyze OTD data

4 Here’s what else to consider

Logistics Management

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What are the best practices for measuring on-time delivery KPIs?

1

2

3

4

1 Define OTD criteria and targets

2 Choose an OTD formula and method

3 Track and analyze OTD data

4 Here’s what else to consider

Logistics Management

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