Things are no longer the way they were several years ago. The evolution of the world system and time has also impacted the way products are traded, giving rise to the booming e-commerce industry. The e-commerce industry is growing at a fast pace as everyone seeks more comfortable ways of purchasing using mobile gadgets. The case is no different for the UAE market. The UAE e-commerce market hit a value of $3.9 billion in 2020 and has experienced a growth rate of about 53% yearly since then.
The success of e-commerce brands in the UAE hinges on several factors. One major factor is the tracking of business performance using key distribution metrics. There are a bunch of distribution metrics, but the On-Time In-Full (OTIF) is the focus of this piece.
This article will take a deeper dive into the On-Time In-Full (OTIF) metrics and how it plays out in the UAE market.
OTIF is an acronym for On-Time In-Full. It is a distribution metric that measures the number of orders delivered on time and in full. It gives businesses insights into how well they meet customers’ delivery needs and answers whether orders were fully delivered on the expected date or not.
OTIF is a key performance indicator largely employed by e-commerce brands, although several other forms of businesses also use OTIF in their supply chain.
As a crucial key performance indicator, OTIF is indispensable for e-commerce and retail brands. Here are the ways OTIF shows its importance in Retail Fulfillment and E-commerce Fulfillment.
The On-Time In-Full (OTIF) KPI helps keep brands in the loop with all that is going on with their fulfillment and delivery operations. It gives the brand an insight into the efficiency of the fulfillment process and if it translates into delivering products on time and in full.
A part of delivery efficiency hinges on the shipping partners of the brands. As a result, OTIF can help track the efficiency of your 3PL distribution.
The efficiency in delivery also speaks volumes about the previous processes of the supply chain. The OTIF can easily help identify areas of the supply chain that need improvement.
OTIF is majorly seen as a delivery KPI. But a view of the supply chain shows that all processes are interwoven such that one process influences the other. It would also help to bear in mind that delivery is at the later stages of the supply chain and can also be implemented in between the supply chain in special models. Hence OTIF impacts the following areas of the supply chain.
This involves making products readily available for customers to make orders. Products have to be in stock to facilitate orders and shipping.
A good storage facility will enhance the availability of products for orders and shipping. A low OTIF may suggest that the warehouse isn’t effective. Beyond storage, fulfillment also begins in the warehouse. This involves picking, packing, and organizing orders for shipping. Hence OTIF could trigger e-commerce businesses to look back at their warehousing facility.
OTIF clearly shows if the shippers are doing a great job or not. Shipping partners have the responsibility of delivering orders on time. The OTIF KPI can also reveal if orders were delivered in good condition.
Once orders are delivered in full and on time, customers are bound to be happy. Hence a low OTIF score could suggest that customer satisfaction is below par.
It’s quite relieving that an important KPI like OTIF isn’t difficult to calculate. It can be calculated using the mathematical relationship below:
On-Time In-Full Rate = (Total deliveries made on time and in full/ Total deliveries) X 100
This will give results in percentage, which depicts the OTIF score. For example, if an e-commerce brand makes 1000 total orders, and 800 of the orders were delivered on time and in full, the OTIF will be calculated thus;
OTIF = (800/1000)X 100 = 80%
This is a good OTIF score; according to standards, an OTIF of 80% to 90% is worthy of success.
It’s not all rosy in the business world, as there are times when brands record low OTIF. Some causes include;
OTIF will definitely be low in situations of late deliveries. Businesses can receive calls, complaints, and emails about delivery delays. This can also be seen in the order management dashboards.
Consistent delays in deliveries will dissatisfy the customers and can run the business down. The reasons for late deliveries could include the supplier, shippers, and warehouse operators.
When making orders, customers select components of the product to suit their desires. This could include size, color, weight, etc. When customers receive a product different from what was ordered, it becomes an inaccurate order.
Increasing inaccurate orders will yield a low OTIF score.
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