OTIF (On Time, In Full)

What is OTIF?

OTIF stands for “On Time, In Full.” It’s a key performance metric within supply chain management because it represents the efficiency and reliability of the delivery process.

Significance of OTIF.

OTIF measures the ability of a supplier to deliver goods to a customer’s designated location within the agreed-upon timeframe and in the quantities specified on the purchase order.

Achieving a high OTIF rate indicates that a company effectively meets customer demand, minimizes stockouts, reduces lead times, and enhances overall supply chain performance.

Conversely, a low OTIF rate can lead to customer dissatisfaction, production disruptions, increased costs, and reputational damage.

Measurement of OTIF.

The OTIF metric is typically expressed as a percentage and calculated by dividing the number of orders delivered on time and in full by the total number of orders fulfilled within a specific time period.

Here’s an example.

Company ABC placed 100 orders with Supplier XYZ. Of these orders, 90 were delivered with the agreed-upon terms — they’re on time and for the right amount. The OTIF rate would then be 90%.

One caveat: It’s important to clearly define what constitutes “on time” and “in full” to have consistent and accurate metrics.

Impact of OTIF.

The OTIF metric directly impacts various stakeholders across the supply chain, including suppliers, manufacturers, distributors, retailers, and end customers.

For suppliers, maintaining a high OTIF rate enhances their reputation, strengthens customer relationships, and can lead to repeat business and long-term partnerships.

Manufacturers in particular rely on timely and complete deliveries of raw materials and components to meet production schedules, minimize idle time, and optimize inventory levels, so manufacturing companies require a high OTIF rate.

Strategies for improving OTIF.

To improve OTIF, organizations must adopt a holistic approach that addresses various aspects of the supply chain, from demand forecasting to distribution.

Key strategies may include:

• Demand forecasting. Use accurate demand forecasting techniques to anticipate customer needs and align production and inventory levels accordingly.
• Supplier collaboration. Establish collaborative relationships with suppliers, share demand forecasts, and implement vendor-managed inventory (VMI) programs to ensure timely and accurate deliveries.
• Inventory optimization. Implement inventory optimization strategies, such as just-in-time (JIT) inventory management and safety stock planning to minimize stockouts and excess inventory.
• Transportation efficiency. Optimize transportation routes, modes, and carriers to reduce lead times, minimize transit delays, and improve delivery reliability.
• Performance monitoring. Continuously monitor OTIF performance using real-time data analytics and key performance indicators (KPIs) to identify areas for improvement and implement corrective actions promptly.

By implementing these strategies and fostering a culture of continuous improvement, organizations can enhance their OTIF performance.

OTIF serves as a critical performance metric within supply chain management, reflecting the efficiency, reliability, and effectiveness of the delivery process.

By measuring the percentage of orders delivered on time and in full, organizations can assess their supply chain performance, identify areas for improvement, and implement strategies to enhance customer satisfaction, minimize costs, and drive operational excellence.

How Airbase helps with OTIF.

Although Airbase doesn’t control logistics or transportation issues, by automating purchase requisitions, approvals, and order processing, Airbase makes procurement more efficient.

Airbase’s streamlined workflow reduces delays in purchasing, which in turn supports timely deliveries from suppliers.

Visibility into spending. Airbase provides real-time visibility into spending across an organization, so procurement teams can monitor purchasing and identify areas where delays or discrepancies may occur. This visibility enables proactive management of procurement processes to avoid potential bottlenecks and ensure timely deliveries.

Vendor management. Airbase helps with effective vendor management by centralizing vendor information, contracts, and communications. By maintaining open and collaborative relationships with suppliers, organizations using Airbase can work closely with vendors to address any issues that may impact OTIF performance, such as delivery delays or quality concerns.

Data-driven decision-making. Airbase has robust reporting and spend analytics capabilities to help organizations analyze spending patterns, supplier performance, and procurement metrics.