What is “OTIF” 

There are many factors in measuring the success of a supply chain operation, the common term “OTIF” has become the standard of that measurement for distribution centers. On-time, In-full has no standard definition. It is, though, broadly understood as the ability to deliver shipments to their destination according to the quantity and schedule on the order. In the midst of a pandemic, meeting OTIF is more challenging than ever but what does it mean when you fail to do so? According to McKinsey & Company, the US food retail industry loses an estimated $15-20 billion in sales every year because the items are either out of stock or unusable.  

What do these losses mean?

Based on these losses now being uncovered this means that company’s such as Walmart are beginning to push back by changing their standards. Suppliers for Walmart now must meet an OTIF rate of 98% and if the OTIF rate does not meet that number, the supplier is then penalized 3% of the cost of goods sold. These On-time, in full standards, have been created to fight against out-of-stocks. 

What this means for distributors 

As a distributor, the new goal is to reach an OTIF rate that supports a successful supply chain operation. But at what point is an OTIF score considered good or acceptable? Of course, going for the 100% on-time, in-full rate is the goal, but all supply chain operations still run into challenges, and falling short becomes a reality. 

In short, distributors should be working towards that 100% OTIF rate even though they might not achieve it. Just having a “good” on time, in full score leaves a lot of opportunity on the table and is no longer a practice you can survive by maintaining. Optimizing warehouse efficiency is the best way to improve a supply chain operations' OTIF, and leveraging technologies such as prescriptive analytics and warehouse orchestration can help acquire what’s left on the table in your supply chain operation.