Learn about the best metrics to measure and improve your supplier performance in on-time delivery, and how to use them for effective vendor management.

📦 When evaluating supplier performance in on-time delivery, it's crucial to consider the right metrics: 1️⃣ On-Time Delivery (OTD) Rate: Measures percentage of orders delivered on or before promised date. 2️⃣ Order Fill Rate: Assesses ability to fulfill complete order quantities on promised date. 3️⃣ Late Delivery Rate: Tracks the percentage of orders delivered after the promised date. 4️⃣ Lead Time Variance: Measures variation between promised and actual delivery dates. 5️⃣ Customer Complaints: Monitors complaints related to late deliveries for qualitative feedback. 🔑 Choose metrics aligned with business requirements and industry norms. Set benchmarks and targets for improvement.

What are the best metrics to evaluate supplier performance in on-time delivery?

On-time delivery (OTD) is one of the most important aspects of supplier performance, as it affects your customer satisfaction, inventory management, and production planning. However, measuring OTD can be challenging, as different suppliers may have different definitions, standards, and methods of reporting. In this article, you will learn about the best metrics to evaluate supplier performance in OTD, and how to use them to improve your vendor management.

1 OTD Definition and Calculation

The first step to evaluate supplier performance in OTD is to define what it means for your business. OTD is the percentage of orders that are delivered by the agreed-upon date, or within a specified tolerance window. However, you need to decide how to calculate the date, the window, and the order. For example, you can use the date of order placement, confirmation, or shipment as the start date, and the date of receipt, invoice, or payment as the end date. You can also use a fixed or variable window, such as 3 days before or after the due date, or a percentage of the lead time. Additionally, you need to determine whether to measure OTD by line item, order, or shipment.

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Raiyan Damanhouri

Vendor Qualification Advisor @ YASREF | Procurement, Maintenance Management. CIPP, CLTD
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📦 When evaluating supplier performance in on-time delivery, it's crucial to consider the right metrics: 1️⃣ On-Time Delivery (OTD) Rate: Measures percentage of orders delivered on or before promised date. 2️⃣ Order Fill Rate: Assesses ability to fulfill complete order quantities on promised date. 3️⃣ Late Delivery Rate: Tracks the percentage of orders delivered after the promised date. 4️⃣ Lead Time Variance: Measures variation between promised and actual delivery dates. 5️⃣ Customer Complaints: Monitors complaints related to late deliveries for qualitative feedback. 🔑 Choose metrics aligned with business requirements and industry norms. Set benchmarks and targets for improvement.

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Yuvraj Singh

Experienced Logistics & Supply Chain Professional | 13+ Years in Transportation, Warehousing, and In-Plant Operations | Skilled in 5S & Kaizen Methodologies for Continuous Improvement
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To evaluate supplier performance in on-time delivery, focus on these key metrics. ⏰ First, the On-Time Delivery (OTD) rate is crucial, measuring the percentage of orders delivered on time. 📦 Monitor the Delivery in Full (DIF) rate to assess if orders are complete when delivered. 📈 Tracking lead time variance helps gauge consistency in delivery times. 📊 Calculate the Delivery Performance Index (DPI) to assess supplier reliability. 📅 Lastly, keep an eye on the number of late deliveries and analyze the reasons behind them to address issues promptly. 🤝 By using these metrics, you can ensure suppliers meet your on-time delivery expectations consistently. 🌟📊👌

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2 OTD Variance and Accuracy

The second metric to evaluate supplier performance in OTD is the variance or accuracy of their delivery dates. OTD variance is the difference between the actual and expected delivery dates, expressed in days or percentage. OTD accuracy is the inverse of OTD variance, expressed in percentage. These metrics help you assess how consistent and reliable your suppliers are, and how much buffer time you need to plan for your inventory and production. For example, if a supplier has a high OTD variance, it means they often deliver too early or too late, which can cause overstocking or stockouts. If a supplier has a low OTD accuracy, it means they rarely meet the agreed-upon dates, which can affect your customer service and reputation.

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Sathiyamurthy Shanmugam

CSCP, CLTD, CTSC, SCOR-P, DDPP, DDLP | Consultant & Trainer - SAP and SCM | APICS recognized Instructor CSCP, CLTD, CTSC, SCOR DS
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Adherence to OTD is crucial for any business since many downward plans would have been made based on this promised date from the supplier. At the same time, how it is measured is also important. For some industries, it should be measured as per exact promised date. For some industries, it may the range of +/- 2 days. For some, it may be adherence to the promised week. Whatever may be, it must be discussed and agreed upon with the supplier and made clear to them. Their performance must be communicated as per the frequency and proactive actions should be taken.

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3 OTD Trend and Improvement

The third metric to evaluate supplier performance in OTD is the trend or improvement of their delivery performance over time. OTD trend is the change in OTD percentage over a period of time, such as month, quarter, or year. OTD improvement is the percentage of orders that have a better OTD than the previous period. These metrics help you monitor how your suppliers are adapting to your demand fluctuations, quality standards, and feedback. For example, if a supplier has a positive OTD trend, it means they are improving their delivery performance and becoming more responsive and efficient. If a supplier has a high OTD improvement, it means they are addressing the root causes of their delivery issues and implementing corrective actions.

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Benjamin Reinhartz

Senior Industrial Engineer
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One important issue to pay attention to is monitoring the delivered quantities comparing to the ordered ones. Very often we use the On-Time-In-Full kpi, which tells us that the OTD performance improvement does not come with delivering partial quantities.

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4 OTD Benchmarking and Ranking

The fourth metric to evaluate supplier performance in OTD is the benchmarking or ranking of their delivery performance against other suppliers or industry standards. OTD benchmarking is the comparison of your supplier's OTD percentage with the average or best-in-class OTD percentage of similar suppliers or industries. OTD ranking is the order of your suppliers based on their OTD percentage. These metrics help you identify how your suppliers are performing relative to their peers or competitors, and how they can improve their delivery capabilities. For example, if a supplier has a lower OTD benchmarking than the industry average, it means they are lagging behind their market expectations and need to improve their delivery processes and systems. If a supplier has a low OTD ranking, it means they are among the worst performers in your supplier base and need to be evaluated for potential replacement or termination.

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5 OTD Impact and Cost

The fifth metric to evaluate supplier performance in OTD is the impact or cost of their delivery performance on your business. OTD impact is the effect of your supplier's OTD percentage on your key performance indicators, such as customer satisfaction, inventory turnover, and production efficiency. OTD cost is the amount of money you lose or spend due to your supplier's OTD percentage, such as penalties, discounts, expedited shipping, or excess inventory. These metrics help you quantify how your suppliers are affecting your bottom line and your strategic goals, and how you can optimize your vendor management. For example, if a supplier has a high OTD impact, it means they are contributing to your customer loyalty, operational excellence, and competitive advantage. If a supplier has a low OTD cost, it means they are minimizing your risks, expenses, and waste.

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Benjamin Reinhartz

Senior Industrial Engineer
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A major topic which is strongly related to poor OTD performance is Risk Management. If your RM activity considers suppliers' poor OTD performance as one of your risks - you will very soon find yourself predicting the impact of your suppliers' late delivery on your program. The positive result of such a risk review is moving directly to the next step - risk mitigation. You prepare your system for an alternative route in case your supplier is eventually late.

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6 OTD Reporting and Communication

The sixth metric to evaluate supplier performance in OTD is the reporting or communication of their delivery performance to you and your stakeholders. OTD reporting is the frequency, format, and content of the delivery data and information that your supplier provides to you, such as order status, shipment tracking, and delivery confirmation. OTD communication is the quality, clarity, and timeliness of the delivery feedback and updates that your supplier gives to you, such as delivery issues, delays, or exceptions. These metrics help you ensure that your supplier is transparent, accountable, and collaborative in their delivery performance, and that you can make informed and timely decisions and actions. For example, if a supplier has a high OTD reporting, it means they are providing you with accurate, complete, and relevant delivery data and information. If a supplier has a high OTD communication, it means they are notifying you of any delivery problems or changes as soon as possible and working with you to resolve them.

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Seema Julka (She)

Sustainable Fashion Apparel, Home & Textile Sourcing expert | International business development | Ethical & Sustainable Production| Supply chain management
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It depends on the industry you are in & the product type. For instance fashion industry throws several challenges based on trends & changes while the order is in progress. Thus timely communication of OTD status is very crucial for any business to plan thier launch & product on the floor.

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Benjamin Reinhartz

Senior Industrial Engineer
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An important side value of healthy OTD communication is expecting OTD improvement. Although you receive transparent online updates regarding late deliveries from your supplier - it still does not solve all the bad impact on your program, and you are still unsatisfied with this situation. Your suppliers feels the same, he is afraid that you will no longer tolerate this situation and he starts a great effort of reducing the rate of late deliveries.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Avneesh Pandey

Co-founder & CEO at Ecoverix Solutions Pvt. Ltd I Business Coach l Transformation Leader I Energy Audit l ESG Consultant l ISO & Compliance Mgmt l OE Audit l Impact Assessor l GRC l EPR I Project Mgmt l
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1. On-time delivery rate: percentage of orders or shipments that are delivered on time to the agreed delivery date. 2. Delivery lead time: average time it takes for a supplier to deliver an order from the time it is placed to the time it is received. 3. Fill rate: percentage of ordered items that are delivered in full and on time, without any backorders or partial shipments. 4. On-time in full (OTIF) percentage of orders that are delivered in full and on time. 5. Delivery performance index (DPI): overall performance of a supplier's delivery performance, with fill rate 6. Order cycle time: total time from order to be placed, processed, and delivered 7. Perfect order fulfillment: OTIF without any errors or defects.

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What are the best metrics to evaluate supplier performance in on-time delivery?

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1 OTD Definition and Calculation

2 OTD Variance and Accuracy

3 OTD Trend and Improvement

4 OTD Benchmarking and Ranking

5 OTD Impact and Cost

6 OTD Reporting and Communication

7 Here’s what else to consider

Vendor Management

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What are the best metrics to evaluate supplier performance in on-time delivery?

1

2

3

4

5

6

7

1 OTD Definition and Calculation

2 OTD Variance and Accuracy

3 OTD Trend and Improvement

4 OTD Benchmarking and Ranking

5 OTD Impact and Cost

6 OTD Reporting and Communication

7 Here’s what else to consider

Vendor Management

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