All businesses are centred around their customers. In modern times especially, a customer-centric business is a good business. For e-commerce or even B2B businesses, there are rarely better ways to satisfy customers than providing On-Time Deliveries (OTD). This metric is a ratio of the customer orders delivered on or before the delivery date against the total number of order lines.
On-time delivery of a shipment to the end-customer is the proof of the entire process running smoothly like clockwork, which in most cases has a lot of moving pieces. Plenty of metrics and KPIs come into play in a supply chain management operation. OTD showcases the operational efficiency of your business, which is why it holds paramount importance for a business.
What factors lead to poor OTD performance?
Every manufacturer at some point of time has experienced a poor On-Time-Delivery (OTD) rate. Having a low OTD percentage once in a blue moon is okay, but the real problem starts when you get used to seeing a bad delivery rate. Multiple other elements apart from Customer Relationships are adversely affected due to poor OTD performance, which ultimately leads to a decline in operational efficiency.
There are many underlying factors that cause your OTD to dive down. A few of them are listed below:
- Poor management of CRM software
- Taking excess orders
- Material shortages
- Delay in getting supplies
- Inaccurate inventory management
- Bad SOPs
- Problems in the production line machinery
- Problems with shipping
- Product damage in transit
- Cancellation & reordering by customers
and many more…
Why is OTD important?Apart from offering high-quality products, the other way to impress your customer is by delivering the product on time. On-time delivery not only builds customer loyalty but also improves your brand value in the market.
If you fail to deliver the products on time, then the customer will shift to a new supplier who is more capable than you and meets their expectations for timely deliveries. At this point, you are losing your customer as well as your reputation in the market. Moreover, as mentioned earlier, problems with on-time delivery highlight the traits in your supply chain which can be catastrophic for your success if not solved on time.
In order to bring your business back to its former glory, it is important for you to address these issues and rectify them to ensure a smooth delivery process.
How to improve On-Time DeliveryYou need to understand that bringing your On-Time Delivery performance to an optimal level is not an impossible task, but it is indeed strenuous and time-consuming. You need to address the core issues and rectify them in order to streamline the delivery process. Following are a few ways that could help you solve this issue:
1. Setting a realistic production schedule: While being optimistic about your capability is a good thing, it is equally important to understand the capacity of your production line. You need to ensure that your sales team does not make unrealistic promises to the customers which are way over the production capacity of your plant. Setting feasible goals for your company might be the first step towards ensuring an excellent delivery rate.
2. Organize Inventory Management: Improper management of the inventory can become a serious issue in no time. You need to put reliable inventory management software in place that is flawless and allows you to keep a track of your purchase orders, available stock, the time required for manufacturing etc. You can upgrade to automated material handling systems to improve your production efficiency and allow your manpower to concentrate on other important tasks.
3. Monitor Supplier Performance: Ensuring that you receive the raw materials required for production on time is an important step to uplift the delivery performance. You need to strictly monitor your supplier in terms of the quality of the product, pricing, response time etc. to alleviate the chances of shortage of raw materials. A good habit is to have a backup of reliable suppliers that can get the job done if your primary supplier falls short.
4. Accurate Documentation: To be frank, nobody likes to handle the documentation part of a supply chain but it is something that plays a vital role in ensuring on-time deliveries. A small mistake in your shipping document can cause insurmountable delays in your delivery schedule. To avoid this, you need to make your documentation in advance whilst ensuring that it is error-free.
5. Regular Monitoring of Operations: Once you have rectified all the flaws in your system, you are bound to experience growth in your on-time delivery performance. However, relying on your current plan of action might not be very useful if some other problem pops up that was left unaddressed before. Hence, you need to continuously monitor your chain of operations that lead to a timely delivery. This will help you to identify the flaws in advance and correct them before things go out of hand.
To take care of everything like clockwork, you must consider teaming up with a professional service that prides itself on its accomplishments in the supply chain management arena. One such company is ARK India that has decades’ worth of experience in the supply chain arena and can give you industry-standard supply chain management services.
Getting deliveries to your customers on time should be the number one priority, and we know how to fulfill your goals efficiently and without any delays! Our state-of-the-art services have helped our clients take their business to new heights. To do the same for your business, contact us today! Drop a mail at
[email protected] for any queries.
