OTIF, timely and complete. Understand the importance of using this KPI within your company!
Every customer wants to receive their purchase on time and without any problems, right? That's why companies need to understand the importance of a Key Performance Indicator (KPI), known as On Time In Full (OTIF).
Like other KPIs, OTIF also uses a formula to arrive at its final answer. And it's not that complex—we'll teach you how to calculate it later.
These Key Performance Indicators are crucial for managers to analyze what's going well and what's not working for the company as a whole. Here, we'll discuss the logistics sector in more detail.
Curious about what On Time In Full is? Want to know how important it is for your company and how to apply it? Let's go: read our article until the end.
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Why does my company need Key Performance Indicators?
There is a very common question within companies: Why do I need KPIs? The truth is that currently no business can evaluate its activities without using at least one indicator.
Today, there are several KPIs that can be analyzed. Turnover Rate is one that's always on the agenda of Human Resources managers, for example. For the logistics sector, we can consider Order Cycle Time, as well as others that calculate inventory value and quantity.
Your company needs KPIs to:
● Analyze the ideal time to organize an expansion of activities
● Understand the negative and positive aspects of the process
● View the company's sectors
● Map overloaded or low-production processes
The logistics sector is one of the most reliant on KPIs. Why not learn a little more about them? Stay tuned.
What is OTIF?
On Time In Full (OTIF), translated into Portuguese, means No Tempo e Completo (No Time and Complete). This KPI reveals a lot about a company's logistics progress, how the sector is perceived, and how it operates internally.
In the introduction, we mentioned that no one expects to receive their application late or incomplete, remember? And the main function of the OTIF indicator is to help you with this.
To arrive at an answer, we need to use a formula – we’ll talk about it in a moment.
But before that we need to open this indicator in two, check it out:
On Time
In the expression, the "On Time" part evaluates the time it takes for orders to be delivered to consumers. In your company's case, are you meeting the stipulated deadline? Think about it.
In Full
In Full, on the other hand, is about how the order arrives. Is it complete? Is anything missing? Is something broken or lost along the way? This is crucial for evaluating the entire process.
Do you know why automation and material handling are important for your warehouse? Learn all about this topic in Bertolini's free infographic. Download it now!
How can I calculate OTIF within my company?
The first point to highlight is that On Time In Full offers two perspectives, even though they are within the same process. Therefore, it's necessary to initially calculate them separately, and then combine them.
To assess whether orders are arriving on time and complete, you need to gather some statistics. We suggest conducting this survey every two weeks, or even once a month.
If you have 100 orders delivered within a month and 85 were on time, you will divide the number that was delivered on time (85) by the total number of orders (100). Therefore, we arrive at 0.85 – that is, the On Time is 85%.
For In Full, the same rule applies. If 92 of these 100 orders were completed without any losses along the way, your In Full will be 0.92, or 92%.
Now, to calculate the full OTIF, you need to multiply the two answers. In this case, 0.85 times 0.92. Here, the answer will be 0.78. To get the percentage, multiply by 100. In this example, the OTIF is 78%. Remember, the higher the answer, the better.
And why do I need to calculate OTIF?
Like all Key Performance Indicators, OTIF has several justifications for being implemented within a company.
Check out the main reasons why you should start using On Time In Full within your logistics sector.
Reduce logistics costs
With OTIF, rework can be reduced, as delivery issues are identified. This allows the company to understand where it needs to invest more to ensure better deliveries.
Ensure a good experience and build customer loyalty
Today, people don't buy a company's products solely based on quality or price, but rather on the experience they'll have throughout the entire process. If your OTIF calculation is 78%, for example, it can be deduced that this is your customer satisfaction index.
Identify potential gaps with partners
Not all companies have their own transportation fleet, so OTIF can be a useful tool for analyzing the performance of your logistics partners. If they delay delivery, or even if products don't arrive intact during the contracted services, that's a good reason to switch.
Loading, organizing and transporting goods are essential functions within a warehouse or distribution center. Download Bertolini's free e-book now with tips on the most suitable storage systems for each type of stored product and company operations.
