Supply Chain Director: How Do You Value Your OTIF?

Could one extra point of on-time, in-full delivery performance be worth 0.5%, 1%, 5% or even more of your revenue?

I have faced this question several times while conducting supply chain diagnostics for industrial clients. OTIF reflects an important part of the customer experience, yet translating it into hard cash is no easy task. So how can you put a value on all the effort you will invest in reaching that holy grail? Here are a few thoughts, for which I alone take responsibility.

I. Additional sales

Where reliability is a competitive advantage, every point gained in OTIF will impress even the toughest buyers and tip the scales in your favour against a competitor with poor service levels. You gradually gain market share, and when you pass through the cafeteria, your sales director gives you a hearty slap on the back and laughs loudly. You begin to think that perhaps they actually like you.

II. Recovering deferred sales

The wording may be a little clumsy, but the reality is straightforward. The more orders you fulfil correctly and on time, the sooner your customers pay their invoices. That always helps cash flow before the accounting close, and with a little luck you might even see your CFO crack a faint smile in the corridor.

III. Fewer customer complaints

It is easy to overlook, but customers who are not delivered on time are unhappy, and unhappy customers call your customer service team — whose number they know by heart. If each call lasts an average of ten minutes and half a dozen customers call every hour, you can easily free up the equivalent of three full-time positions in sales administration, time that can finally be devoted to higher-value work. The customer service manager will be eternally grateful, and the whole team gives you a standing ovation as you walk past.

IV. A product catalogue that can flourish

Previously, the product marketing team was frustrated despite having plenty of new development ideas. A new package here, an extra option there… but every time, they were told there were more urgent fires to put out (OTIF, in fact). Now everything is different: suddenly anything seems possible. Even the industrial director has ideas for expanding the range and joins brainstorming sessions. Almost unbelievable.

In short, putting a value on OTIF is not easy, but at least it helps relieve the tension — and that is priceless!