The role of OTIF (on time in full) for retail freight shipments

Does the term “on time in full” (OTIF) ring a bell?

If your business supplies products to retailers, it might. But what does OTIF mean?

In this post, we’ll explain what OTIF is, why it’s important in the logistics industry, and how retail vendors can improve their OTIF performance. 

What is on time in full (OTIF)?

OTIF is a supply chain performance metric used by a wide range of companies, including major brands like Amazon. It measures the percentage of orders that you deliver on time and in full to customers, retailers, or distribution centers. 

Walmart created the metric in 2017 to help prevent late deliveries and other common supply issues.

Here’s how it breaks down:

• On time: Refers to deliveries that arrive within a specified window. 
• In full: Whether all items in an order are complete and meet quality standards. 

OTIF is presented as a percentage to show the proportion of orders out of the total that have been fulfilled successfully. 

What role does OTIF play in the retail supply chain?

In retail supply chains, OTIF helps in the following areas:

• Customer satisfaction: A company with a high OTIF percentage provides their retailer customers with a satisfying service. Customers receive all orders as promised, in the right time window and condition. This can help foster more loyalty and trust between customers and companies. Customers may become advocates for suppliers and recommend them to other retailers. 

• Retailer compliance: Various retailers, such as Walmart or Amazon, set on time in full requirements for their suppliers. They understand that consumers have certain expectations, and any supply failures could prompt them to look elsewhere. As a result, many companies have incentives and penalties in place to encourage better performance. 

• Operational efficiency: The OTIF supply chain metric helps retailers find weaknesses in crucial areas, including logistics, inventory, and communication. This is vital for driving continuous improvement and delivering a high standard of service. Over time, analyzing the OTIF metric may create a stronger company with a more loyal client base. 

• Cost management: Poor OTIF often leads to extra costs on top of standard ones, such as paying for expedited shipping, processing chargebacks, and losing out on sales due to stock limitations. Finding ways to improve OTIF can help businesses avoid additional expenses and create a more cost-effective supply process. 

How can retail suppliers improve OTIF?

Here are a few ways vendors can improve OTIF:

• Enhance demand forecasting: Use data-driven tools to predict demand accurately and ensure that production schedules align. Understanding how demand fluctuates during the year can help vendors prepare for busy and quiet periods. 

• Optimize inventory management: Effective inventory management is crucial for avoiding overstocking or stockouts. By optimizing this process, vendors can ensure that they have an appropriate amount of stock to suit the level of demand. Otherwise, supply delays may disappoint and frustrate clients enough to put them off for good. 

• Strengthen communication: Collaborate with retailers to understand delivery windows, compliance requirements, and any order adjustments. 

• Improve logistics: Partner with carriers you can trust to reduce the risk of supply issues and optimize routes to boost efficiency. Another option is to use technology, such as real-time tracking, to monitor performance.

• Analyze OTIF failures: Resist the temptation to sweep on time in full failures under the rug. Instead, regularly review the root causes for missed OTIF targets (delays, miscommunication, and incomplete orders). That will help you learn from mistakes and avoid further problems.

• Leverage technology: Modern supply chain software can streamline processes and help you minimize time wasted on non-essential tasks. With the best software, you will automate processes, track performance, and respond to disruptions more efficiently. 

Find the right retail freight partner to improve OTIF

The on time in full metric plays a big role in retail freight shipments: it gives you an overall indication of how you are meeting the demands of your retail clients. Keeping track of your OTIF percentage can help you improve your shipping processes and deliver a better overall customer experience.

If your company is aiming to improve your OTIF but needs a little help, working with an experienced retail freight partner could be the solution. DTS is a shipping logistics company helping businesses find the right domestic and international freight transportation solutions at competitive rates. 

Contact us today to learn how we can help your business.