OTIF is a key measure, whether you are using it for your own production purposes of measuring your supply chain’s effectiveness. OTIF stands for On Time In Full and is an excellent measure to determine on time delivery performance.
This might sound like I am stating the obvious, but many organisations do not measure OTIF. Instead they might measure something similar that might be closer to what is known as DSA (Delivery Schedule Adherence). Let me clarify the difference before I carry out with the main point of this article – focusing on the on time start.
Measuring OTIF is a relatively simple affair. You determine how many orders were fully delivered on the date that they were meant to be delivered. You are measuring promises being kept.
With other delivery metrics, such as DSA, you would measure the volume of items delivered on time, compared against the total order quantity required on the day that was agreed.
The difference between DSA and OTIF
So, for a delivery of 98 parts out of 100 delivered on the date agreed you would get:
An OTIF score of 0% (0 complete order / 1 order).
A DSA score of 98% (98 parts / 100 parts).
Yes, OTIF can be harsh. It is also reality. Your customer expected 100% of their order to be delivered on the day that they agreed with you. End of story. OTIF measures promises being kept and that is one of the basic business ‘hygiene’ factors that your customers expect. This is the reason that I encourage my clients to adopt it. A great DSA score feels, to me, like taking the easy route in the world of improvement.
So, what does this have to do with the ‘on time start’ focus?
Too many businesses only look at their on time delivery performance at the final stage of their production / service process. Any ‘lagging’ indicator like this will tell you a story. A ‘leading’ indicator will give you a good idea of what is going to happen at the end. And, if the the leading indicator isn’t looking good then you should still have time to correct the situation and end up with a good result.
Let me give you an example to put this into context.
A real life example
I remember the time that one of my clients had this realisation. They were struggling with their DSA score and were part of a supply chain league table. Their score wasn’t great, it was somewhere in the 50% to 60% range for DSA. After they agreed to use the OTIF score to drive their improvements they calculated a score of under 30%. This kind of conversion (from DSA % to OTIF %) is quite normal and should be expected (for obvious mathematical reasons!).
We worked together on a number of their processes and the results started to improve. However, a key focus was missing from the team – the on time start. In essence, this approach is all about proactive management of the business processes and requires a different set of questions to be asked each day by management. This mind shift includes focusing on the ’cause’ elements of your business and not worrying quite so much about the ‘effects’. Starting processes on time is a cause and delivering on time is an effect, for most of us at least.
Their Operations Manager resisted this change in approach for a few weeks. However, one evening as we were discussing the progress on other elements of my project he stated:
“Hang on! If we don’t start on time then we’ll never catch up and deliver on time!”
And then the penny drops!
He got it. It also sounds really daft that we had this conversation but the pressure of delivering on time (and the potential risk of the business losing work due to poor delivery performance – a threat they had already received) had put everyone’s focus onto the delivery vans leaving their factory.
The next day the Team Leader in charge of kitting (their first step in production) was asked to report daily on his ‘kitting OTIF’ score. It wasn’t great at first but with focus and some simple Kaizen improvements the OTIF score rose. From there, following the internal OTIF scores through other areas of the business their overall OTIF score climbed into the low 80s. However, their DSA (which is what their customer was using to gauge the supply chain) was now consistently over 98%. Within three months they had gone from the bottom of the league table to the top.
A high OTIF generally translates to a high DSA score. OTIF also helps you to pin point the real delivery performance being achieved and the effectiveness of your management systems.
On time start focus is just one approach to improving OTIF
There are certainly other improvements we made to their business processes that helped facilitate this dramatic change in OTIF performance (you can find out more in The OTIF Improvement System) but this shift in focus was the key that unlocked the results for this company.
Whether you are using OTIF to measure your supply chain, your internal operations or just the output of your business I hope that you can see its benefit. Like most things in life that are good for you, a harsh metric like OTIF can force you to face up to your current operational limitations and challenge yourself to reach the next level of performance.
I hope you choose to use it and couple it with the focus of the internal on time start.0,The OTIF Improvement System