17 October 2021 Conosci l’OTIF, un indicatore che misura la tua efficienza in base a ciò che conta di piĂą: il cliente OTIF “What cannot be measured cannot be improved” – you must have heard this phrase many times, right? Although it sounds like business jargon, it speaks volumes about the secret to business success. Successful companies constantly monitor their numbers to identify areas for improvement and achieve their goals. In logistics, it’s no different. Currently, with the intense competition for markets and the high level of customer demand, seeking satisfaction in every service is a premise to keep up with competitors. And, to measure your logistics efficiency, there’s nothing better than evaluating it from your customer’s perspective. For this, there is a specific indicator, OTIF. OTIF stands for “On Time In Full”. Its basic concept is the timely delivery of the right product, hence the division of the indicator into two main elements: On Time: measures the timeliness of the order (was the product delivered on time and at the agreed location?) In Full: measures the efficiency of all services and logistics processes, that is, if the products/services meet the specifications agreed with the customer – quality, size, quantity, perfect physical condition, price, among other attributes. By analyzing these two points that make up the perfect order, the OTIF indicator can provide a broader view of the level of service offered to the customer, that is, whether the company has met all its expectations. And it is important that both “On Time” and “In Full” are respected, after all, if you deliver within the agreed deadline, but there is some issue with the product, the customer will be dissatisfied. Similarly, delivery delays also generate dissatisfaction, as evidenced by the number of complaints on consumer protection websites. That’s why OTIF brings together these two evaluation points. It is worth noting that one of the advantages of working with OTIF is that it segments the source of the problem. The company can identify whether its weak point is in delivery or in the production/preparation of orders and, therefore, act more objectively, quickly, and efficiently. If “On Time” has low rates, the manager must evaluate how the shipping is, the service provided by the courier or postal service, among other aspects related to external logistics. If, on the other hand, “In Full” shows low percentages, it is a sign that the problem lies within the operation, whether in order processing, picking, packaging, checkout, or shipping. How to calculate OTIF? Before presenting how to calculate OTIF, it is important to make two observations: • OTIF is based on order fulfillment and not on order volume • Monitoring this indicator must be carried out with the evaluation of each element separately, that is, On Time x In Full. For the calculation to be performed correctly, it is essential to record the date and time the order was fulfilled; have/provide a delivery forecast to the consumer and keep the OTIF record always updated. The calculation is relatively simple. Suppose a company made 1,000 deliveries a month, 900 of which were delivered on time and 800 within the customer’s specifications: On Time (in %): number of deliveries made on time / total number of deliveries (for example: 0.9 or 90%) In Full (in %): number of deliveries that met the specifications / total number of deliveries (for example: 0.8 or 80%) OTIF (in %): On Time x In Full (in the example: 0.9 x 0.8= 0.72, or 72%). As noted, for OTIF to reach 100%, all requirements must be met simultaneously. The market benchmark that companies strive to achieve is OTIF above 90%. Importance of the indicator and its benefits As mentioned at the beginning of this text, every company needs to monitor the performance of all its processes/numbers to identify failures and seek improvements. You cannot improve if you are not sure which points deserve attention. In the case of OTIF, in addition to evaluating the quality of customer service, it is also possible to discover which stages of the process fail, after all, several processes occur before delivery. We can say that OTIF provides an expanded view of the entire logistics operation, from the moment the order arrives at the warehouse to delivery to the customer. And this also includes evaluating rework and reverse logistics rates, as well as the quality of service offered by couriers/postal offices. When OTIF is monitored and the company always seeks higher scores, several advantages are obtained, such as: – Improved delivery performance; – Increased customer satisfaction, consequently, competitive advantage in the market; – Change in corporate culture – all work is focused on customer satisfaction in the best possible way; – Continuous qualification of processes, increased productivity, and consequent reduction of operational costs. Implementation of OTIF Now that you know the importance of OTIF and the benefits of using this indicator, the next step is to implement it. For this, it is essential to have the help of professionals to implement the cultural change in the internal environment and prepare the team to perform the correct data collection and analysis. And remember: having a warehouse management system (WMS) will make a difference in the performance of logistics processes, which directly impacts the increase in the OTIF percentage. It is worth adding that, with the WMS, it is possible to monitor all operating data in real-time through the Visual Management solution. And this makes a difference in identifying inefficiencies in the operation and promoting continuous improvement. With Visual Management, it is much simpler to monitor OTIF, evaluate the team’s work, the time taken in each process, the ideal use of equipment, among other information. A great advantage of this feature is that any failure is automatically notified by the system, that is, the WMS always monitors the efficiency of its operation, ensuring the achievement of maximum performance. What is OTIF and how can it help your company Deagor WMS per ecommerce può aiutarti!