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On-Time Delivery

Learn how on-time delivery (OTD) tracks delivery commitments in facilities management, crucial for client satisfaction and efficiency.

Jonathan Haney headhsot
Jonathan Haney

Senior Director, Marketplaces

Modified on

June 6, 2024

What is On-Time Delivery?

On-time delivery (OTD) is a key performance indicator in facilities management services. It measures the rate at which services or products are delivered within the agreed-upon timeframe. On-time delivery metrics represent the percentage of maintenance tasks, repairs, or any service deliverables that are completed and provided to the client by the promised date and time. OTD is a crucial metric for gauging delivery performance and supply chain efficiency. It plays an important role in customer satisfaction and operational excellence because, without promised delivery dates, you may get customer complaints and miss deadlines.

What is the On-Time Delivery Calculation?

The on-time delivery calculation is a metric used to measure the efficiency and reliability of a delivery process, ensuring that goods or services are provided to customers within the promised time frames. Here’s how you can calculate on-time delivery using the on-time delivery formula:

Steps to Calculate On-Time Delivery

  1. Count on-time deliveries: Track the number of deliveries made on or before the promised delivery date within a specific period, such as a month or a quarter.
  2. Total deliveries: Count the total number of deliveries made during the same period.
  3. Calculate the on-time delivery rate: Divide the number of on-time deliveries by the total number of deliveries and then multiply by 100 to convert the result into a percentage.

Formula for on-time delivery: On-Time Delivery Rate = (Number of On-Time Deliveries / Total Deliveries) × 100%

Example of Calculating On-Time Delivery

Suppose a company made 200 deliveries in a month, and 180 of these were delivered on or before the promised delivery date.

  • Number of On-Time Deliveries: 180
  • Total Deliveries: 200

Using the formula: On-Time Delivery Rate = (180 / 200) × 100% = 90%

This calculation indicates that 90% of the deliveries were made on time, which suggests a high level of efficiency in the delivery process. Tracking on-time delivery is essential for businesses to evaluate their logistic performance and customer satisfaction and to identify areas for improvement in their delivery systems.

How On-Time Delivery is Used: Practical Examples

OTD is used across various aspects of facilities management to ensure that all operations are timely and efficient. Here are some practical examples:

  • Service level agreement (SLA) compliance: Facilities management companies often agree to SLAs with their clients that include specific OTD rates. Compliance with these rates is crucial for maintaining contracts and avoiding penalties.
  • Performance tracking: OTD can be tracked over time to assess the performance of service teams. For instance, if a facility management company notices a decline in OTD, it may indicate a need for process improvement or additional resources.
  • Customer reporting: OTD rates are frequently reported to clients as part of performance reviews. A high OTD rate can reinforce a client’s confidence in the facility management provider’s services.
  • Vendor evaluation: When outsourcing services, facility managers can use OTD rates to evaluate and select vendors, ensuring they choose partners who can meet their time-sensitive needs.

In facilities management, a firm overseeing a large office building might track on-time delivery (OTD) for various services such as electrical repairs, janitorial work, and security services. For instance, if the firm guarantees 24-hour response times for electrical issues, they monitor each incident to ensure the response is within the promised timeframe. Over a month, if they observe that only 85% of electrical repairs meet this criteria, the firm can investigate the causes, such as understaffing or supplier issues, and take corrective actions to enhance their service delivery and meet their OTD commitments.

Ways to Reduce On-Time Delivery

Improving OTD is crucial for facilities management companies seeking to enhance their service quality and client satisfaction. Here are strategies to reduce OTD:

  • Optimize scheduling: Implement advanced scheduling tools to ensure that tasks are assigned in a way that accounts for travel time, service complexity, and technician availability.
  • Improve inventory management: Maintain an adequate stock of commonly used parts and materials to avoid delays caused by sourcing and procurement.
  • Enhance communication: Use technology to improve communication channels between dispatchers, technicians, and customers, providing real-time updates on service progress.
  • Train staff: Regular training for staff can help them understand the importance of OTD and equip them with the skills needed to deliver services efficiently.
  • Implement process improvements: Continuously analyze service delivery processes to identify bottlenecks and implement improvements.
  • Leverage predictive analytics: Use data and analytics to predict potential delays and proactively manage risks that could impact OTD.

For instance, a facility management service provider might use predictive analytics to forecast peak periods for air conditioning repairs and schedule additional technicians in advance. By doing so, they can maintain a high OTD rate even during times of increased demand.

Managing and improving on-time delivery is a multifaceted effort that requires attention to detail, strategic planning, and the effective use of technology. By focusing on these areas, facilities management companies can achieve higher OTD rates, leading to better client relationships, improved operational efficiency, and a stronger competitive edge in the marketplace.

Frequently Asked Questions (FAQs)

What are steps to guarantee high on-time delivery service rates?

Steps to guarantee high on-time delivery service rates are the following:

  1. Accurate forecasting: Predict demand to ensure resources are adequately allocated.
  2. Efficient inventory management: Keep optimal inventory levels to avoid delays.
  3. Reliable supplier management: Maintain strong supplier relationships and monitor their performance.
  4. Streamlined processes: Optimize workflows to remove bottlenecks using lean techniques.
  5. Advanced planning: Use scheduling systems to coordinate production and delivery efficiently.
  6. Technology integration: Implement systems like TMS and WMS for better logistics control.
  7. Quality control: Enforce strict quality checks to minimize rework-related delays.
  8. Performance monitoring: Regularly assess delivery performance and adjust strategies accordingly.
  9. Customer communication: Keep customers informed about order statuses and potential delays.
  10. Continuous improvement: Continually seek and implement feedback to enhance delivery processes.

How do you track on-time delivery KPI?

Tracking the On-Time Delivery (OTD) Key Performance Indicator (KPI) involves a systematic approach to measuring how effectively a company meets the delivery times promised to customers. Here’s how to do it:

  1. Define on-time delivery: Clearly define what “on-time” means for your organization. This could be delivering on the promised date, within a window of time, or before a critical deadline.
  2. Set up tracking systems: Implement systems to monitor and record each order’s delivery status. Depending on the scale of operations, this could involve using logistics software that updates delivery statuses in real time or manual tracking methods.
  3. Collect data: Gather data on each order’s delivery time. This includes the promised delivery date, the actual delivery date, and any factors that led to delays.
  4. Calculate OTD rate: Divide the number of orders delivered on time by the total number of orders fulfilled in the same period, and then multiply by 100 to get the percentage of on-time deliveries.
  5. Analyze performance: Review the OTD data regularly to identify trends, patterns, or recurring issues that may be affecting delivery times.
  6. Report findings: Develop reports or dashboards that summarize the OTD performance, providing insights to management and relevant stakeholders.
  7. Set improvement goals: Based on the findings, set realistic improvement goals to enhance the OTD rate. This might involve addressing specific issues like supplier delays, logistics inefficiencies, or internal processing times.
  8. Implement changes and monitor results: Make necessary changes in the supply chain, logistics approach, or internal processes. Continuously monitor the effects of these changes on the OTD KPI to ensure positive impacts.

How do you manage late deliveries?

You can manage late deliveries by doing the following:

  1. Proactive communication: Immediately inform customers of delays, explain the situation, and provide a new expected delivery date.
  2. Analyze causes: Identify and address the root causes of delays, such as supply chain issues or production inefficiencies.
  3. Implement contingency plans: Use backup suppliers and alternative shipping methods to mitigate delays.
  4. Optimize logistics: Review and adjust shipping routes and operations to enhance efficiency.
  5. Update inventory management: Improve inventory forecasting and management to prevent future shortages and delays.
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