'On-Time, In-Full' Consumer-Goods Supply Chain Sector

 

Welcome Back Dear Readers! Hope you're doing Good. 

Here Saradha Preethi again with an Interesting Blog.😎 

It is all about "OTIF", Let's jump into a Detailed Information!

What is “On-Time, In-Full” (OTIF)?

OTIF measures the extent to which shipments are delivered to their destination in accordance with the quantity and schedule specified on the order.

"Theoretically, OTIF should be the ideal mechanism for aligning the objectives of retailers and manufacturers," says the global consultancy.

Survey says..

To gain an industry perspective on OTIF, the Trading Partner Alliance (TPA) and McKinsey surveyed major retailers and manufacturers of North American consumer packaged goods (CPGs).

Ninety-two percent of these companies agreed that the OTIF industry standard would create value.

"Collaboration would help partners solve supply problems more efficiently and effectively-creating value for both supply chain participants and consumers."

The "On-Time, In-Full Delivery Metric:

The complexity of the supply chain is increasing as customers are demanding a wider product selection, a wider choice of channels, and more promotional offers.

The pressure on delivery performance has intensified with expectations of higher on-shelf availability and lower inventory costs-as has the need for manufacturers, retailers and carriers to work together to create an efficient, reliable and responsive supply chain.

The global pandemic has accelerated this trend and revealed some major gaps in the global supply chains along the way.

In order to fill these gaps, an increasing number of companies operating in the consumer sector have adopted the 'on-time in-full' (OTIF) delivery metric.

OTIF would also,

Create a command view:        

• A common view of supply-chain performance would support consumer-goods supply chains by aligning service expectations; enabling joint performance management; and encouraging performance benchmarking.

Streamline data complexity:

• "Retailers and manufacturers end up devoting considerable time to explaining and reconciling differences in reported data," McKinsey points out. "Carriers are often caught in the middle, as both retailers and manufacturers push them to improve performance on the basis of inconsistent data and requirements."

Reduce supply chain complexity:

• Because each retailer has a different definition of OTIF, manufacturers must comply with a variety of different delivery standards and keep up with the individual definition of each retailer. "Even major retailers use different definitions and their definitions keep evolving," McKinsey points out.

So what's the solution?

A viable working definition of OTIF, according to McKinsey, would be as follows: "The quantity delivered to the destination by the requested date of delivery, calculated as a percentage of the quantity ordered."

Other OTIF parameters would include:

Any quantity over-delivered or incorrect product shall not be taken into account.

Arrival at the destination facility (instead of being checked in or unloaded, which may be subject to delays beyond the control of the manufacturer).

The requested delivery window should be the delivery date requested at the time of placement of the order, adjusted for any delay in the appointment of the retailer, measured at the end of the working day and with a one-day early allowance.

Happy Learning with Sara!!😇