How to Improve On-Time & In-Full (OTIF) Performance

March 20, 2024

How to Improve On-Time & In-Full (OTIF) Performance


Continental Logistics

As online shopping and global trade have become easier, what people want has changed too. With so many choices, folks want their stuff right away. Making sure things arrive on time and in full (OTIF) is super important for online businesses to do well.

Consumers’ demand for instant gratification is skyrocketing: The global same-day delivery services market grew to $7.93 billion in 2023 at a compound annual growth rate (CAGR) of 23.1% — and experts predict it will nearly double to $15.8 billion by 2027.

For companies, delivery services, and logistics professionals, how well they do with OTIF can make or break their customer success scores. Keeping up with this can help them stand out from the competition and build strong relationships with suppliers and distributors.

This article explains why OTIF rates matter, how they affect vendor scorecards, and how to improve them. If you're a shipper looking to improve logistics efficiency and operations, this article will give you some great tips, especially on choosing the right 3PL partners like Continental Logistics.

Understanding the OTIF Metric

Understanding the OTIF metric is key for shippers who want to optimize their supply chain operations and continue to grow their business. OTIF simply means a shipment arrives on time (not early and not late) and in full — the right product(s) in the correct amounts, and in pristine condition.

Walmart created this metric in 2017 to evaluate how well suppliers and vendors performed in delivering freight to a designated store or distribution center on time and in full — vital factors in keeping shelves filled and customers happy. Other retailers soon followed with similar programs. Shippers who consistently meet OTIF earn more trust and get more work. Those who don’t meet the standards face fines, strained relationships, and missed business opportunities.

The initial OTIF benchmark of 75% increased annually until reaching 98% in 2020. Starting in February 2024, Walmart adjusted its benchmarks to 90% for on-time and 95% for in-full.

Calculating your score is easy: divide the number of OTIF shipments by the total number of shipments.

However, achieving high OTIF scores is challenging for many reasons.

Factors Affecting OTIF Performance

Various factors that influence delivery reliability affect on-time and in-full (OTIF) performance. Both internal and external aspects play pivotal roles in shaping OTIF outcomes.

Internal Factors

Shippers' delivery timelines are influenced by various aspects of their internal operations, which can impact OTIF performance.

  • Inventory Management Practices: Inventory management directly influences stock levels. When items are out of stock, on-time delivery becomes a challenge. Effective inventory management ensures stock levels are always full and ready to meet customer demand, reducing the risk of stockouts and late deliveries.
  • Forecasting Accuracy: Demand forecasting, in turn, influences inventory levels. If a business cannot forecast demand accurately, it is likely to default on delivery timings as well, leading to negative OTIF performances. Accurate demand forecasting allows shippers to anticipate future requirements and plan for better resource allocation to fulfill orders promptly.
  • Production Scheduling Efficiency: When producing schedules are not aligned with demand forecasts, the possibility of stockouts increases. Streamlining production processes and scheduling operations can increase shippers’ ability to meet delivery deadlines and maintain order completeness.

External Factors

Many factors outside of a company’s control can also lower OTIF rates.

  • Supplier Reliability: Businesses depend on suppliers to provide the right inventory at the right time. However, disruptions or delays from supplier partners can flow down, impacting OTIF performance.
  • Transportation Issues: While reaching destinations on time is ideal, shippers and logistics stakeholders always face transport disruptions, such as port and road closures, traffic congestion and accidents, and inclement weather. These factors can impede timely deliveries, making for bad OTIF performance metrics.
  • Market Demand Fluctuations: Finally, as markets change due to economic differences throughout the year, consumer demand is likely to change as well, making it difficult for businesses to forecast demand accurately every time. Sudden changes in demand can also adversely affect OTIF performance.  

While these factors can make or break OTIF performance, shippers and logistics stakeholders can take charge of their supply chains more effectively to control OTIF rates via strategies like process optimization, technology integration, and vendor management.

Strategies to Improve OTIF Performance

Improving and enhancing OTIF performance requires a concerted effort to streamline processes. Technology, collaboration, and rigorous performance monitoring can also help improve OTIF performance. By implementing the following strategies, shippers can optimize their supply chain operations and consistently meet delivery commitments, directly improving customer satisfaction.

1. Optimize Processes To Improve OTIF

Using lean management principles and processes to improve supply chains can speed things up and make timely deliveries. Shippers can improve order management and delivery speed more accurately by reducing lead times. By organizing things better, they can do a better job with OTIF. For instance, making sure the steps from getting an order to sending it out are as smooth as possible helps stop delays and ensure everything gets where it needs to go on time.

2. Leverage Data Analysis

Another way to improve processes is using data analytics to get bridge the gap between processes and systems. You can leverage data analysis to track equipment effectiveness, qualify supplier and vendor partners against industry benchmarks, measure performance KPIs consistently, track pallet and SKU locations, and more. Real-time tracking and visibility-based transportation solutions like Continental Logistics provide stakeholders with transparency into the status of shipments, allowing for proactive management of delays.

Further, using advanced planning and scheduling systems (APS) enables shippers to optimize production and distribution processes, matching capacity with demand. It also will enable shippers to better utilize their resources.  

3. Outsource Vendor Management

Collaborative planning with suppliers is essential for ensuring timely delivery of materials and components, reducing lead times, and improving overall supply chain efficiency. By establishing clear expectations and holding suppliers accountable for performance, shippers can mitigate risks and minimize disruptions that could impact OTIF performance. All this can easily be achieved by setting robust vendor management systems in place using automation or 3PL services.

4. Outsource Transportation Management

Selecting reliable carrier partners is crucial for ensuring consistent and dependable transportation services. By partnering with carriers prioritizing reliability, responsiveness, and on-time delivery, shippers can minimize the risk of delays and improve OTIF performance. Optimizing route planning and load consolidation further enhances efficiency and reduces transportation costs, improving OTIF performance.

5. Monitor Performance Metrics Regularly

Regularly reviewing  OTIF performance helps shippers assess results against targets, identify root causes of deviations, and implement corrective actions as needed. By leveraging data analytics and performance metrics, shippers can identify trends, patterns, and opportunities for improvement, guiding continuous improvement initiatives to enhance OTIF performance over time.

Improving your OTIF performance requires a holistic approach encompassing process optimization, technology integration, vendor management, transportation management, and performance monitoring. By implementing these strategies, shippers can enhance their supply chain operations, improve customer satisfaction, and drive business success. For shippers seeking to enhance their OTIF performance and achieve supply chain excellence, partnering with a 3PL like Continental Logistics can provide access to a full suite of transportation services and expertise to support their strategic objectives.

Choosing the Right 3PL Partner With OTIF Excellence

Selecting the appropriate 3PL partner is paramount for shippers aiming to achieve OTIF excellence. When evaluating potential partners, shippers should consider:

  • Do they have a track record of reliability and superior OTIF performance?
  • Do they have a robust technology infrastructure?
  • Do they demonstrate a commitment to continuous improvement?

Partnering with a 3PL with proven expertise in delivering on-time and in-full shipments instills confidence and aligns with the shipper's objectives of enhancing supply chain efficiency and customer satisfaction.

A reliable 3PL is pivotal in supporting shippers to achieve their OTIF goals by providing access to a comprehensive suite of transportation services, industry knowledge, and operational excellence. From optimizing transportation routes and managing carrier relationships to implementing advanced tracking and visibility solutions, a strategic 3PL partner like Continental Logistics collaborates closely with shippers to streamline processes, mitigate risks, and ensure timely and complete deliveries.

Elevating Supply Chain Performance with OTIF Excellence

Achieving OTIF excellence requires a multifaceted approach encompassing process optimization, technology integration, vendor management, transportation efficiency, and diligent performance monitoring. By implementing these strategies and collaborating with experienced a 3PL provider like Continental Logistics, shippers can enhance their supply chain operations and drive business success.

Continental Logistics offers tailored solutions and unparalleled support to optimize supply chain operations and deliver superior customer experiences. Contact Continental Logistics today to learn more.

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