To achieve better OTIF levels and eliminate the impact of increased COGS and decreased profits, progressive supply chain leaders are digitalizing supply chain issue management activities and using process improvement methodologies to reduce the severity and number of supply chain issues.
On time, in full (OTIF) is one of the most important key performance indicators (KPI) for supply chain leaders. This important metric measures the accuracy and timing of delivery performance and is a direct reflection of an organization's supply chain efficiency.
OTIF measures an organization's ability to:
- Deliver the expected and correct product order to the customer.
- Deliver the quantity ordered.
- Deliver to the customer’s desired location.
- Deliver it by the customer’s expected date.
The top goal for every supply chain organization is to deliver the requested amount of the ordered product to the customer at the right time, in the right place. Daily supply chain issues, however, are a constant reality for organizations and adversely impact the ability to attain OTIF goals. Common supply chain issues such as schedule changes, late shipments, production delays, material shortages, and damaged goods are just a few of the many issues that impact a company’s ability to deliver on-time in-full.
Compounding the negative impact of the original supply chain issues that occur are lengthy issue resolution times that result from inefficient processes and ad hoc tools used to resolve supply chain issues. These inefficient tools, including phone calls, emails, spreadsheets, and meetings, result in issues taking five-to-six weeks to resolve. To maintain acceptable OTIF levels, companies must increase inventory levels to cover long resolution times (thereby increasing inventory carrying costs) and expedite shipping to meet customer expected delivery dates (thereby decreasing profits).
To achieve better OTIF levels and eliminate the impact of increased COGS and decreased profits, innovative supply chain leaders are digitalizing supply chain issue management activities and using process improvement methodologies to reduce the severity and number of supply chain issues. As a result, these companies have seen vast improvements in OTIF. Incident Management, a capability of TraceLink Supply Chain Work Management, enables companies and their supply chain partners to digitalize the supply chain issue management process to work collaboratively on the resolution of supply chain issues. Digitalizing key activities in the disruption management process enables seamless reporting, root cause analysis, and resolution of all issues across the end-to-end supply chain. In fact, one TraceLink customer achieved a 65% reduction in time to resolve supply chain issues and a 35% reduction in the total number of supply chain issues.
Used in combination with process improvement methodologies like Six Sigma, the data captured with Incident Management can be further used to improve supply chain processes and reduce supply chain disruptions that resulted from too many issues with long resolution times and/or high business impact. The reduction of these disruptions decreases order fulfillment cycle times, which improves supply chain agility and reduces the need for buffer stocks. These improvements have proven to help organizations increase OTIF delivery performance by as much as 82%.