What is the P&L impact of OTIF?

Part of my role at C3.ai is to estimate the impact of our applications on our customer's processes. Often, because I work mostly in Supply Chain opportunities, I am brought to the same question: how valuable is an additional 2-5% OTIF improvement to an organization?

One of the most common KPIs to measure service level in SCM is OTIF (On Time In Full) but, why is it so hard to measure its impact on the P&L statement? Why are there so few articles and academic literature on this subject? You can find business reports that estimate the impact of OTIF on transportation costs and working capital reduction but, is OTIF only about cost savings???

OTIF is not only about cost savings. It is about a much more relevant outcome: customer satisfaction. Unsatisfied customers expect discounts, rarely repeat sales, and certainly do not recommend your product. OTIF's impact on increased sales is intangible: it is very hard to measure the opportunity cost of sales that never happened because of broken processes. But that does not mean that it can be ignored or that it is lower than its, more tangible, impact on cost savings.

These days we are attending the World Cup and fans often find it ironic that defenders are so disregarded by the media when their relevance in the final score is as high (if not higher) as that of the forward player. Well, service level does have an impact on increased sales and it is often comparable to, if not higher than, cost reduction. Do not ignore it just because it is hard to see.