Your on-time delivery performance can have a huge impact on the success of your business.
When goods arrive at your customer’s door in good condition and on time, or, better yet, earlier, you’ve gained a satisfied customer. A happy customer is a repeat customer who will help your business get more referrals and new business opportunities.
On the other hand, damaged goods or exceptionally late delivery can lose customers and hurt your brand.
To stay on top of your delivery performance, track your operations with on-time delivery metrics. Use them to uncover logistical issues and optimize your operational efficiency. In this blog, you can learn how.
Let’s start with the basics.
What does on-time delivery mean?
On-time delivery (OTD) means delivering goods on or before the agreed-upon time. It refers to your company’s ability to meet clients’ deadlines and transport loads in a timely manner. Commercial fleets can achieve OTD with proper fleet asset management.
What are on-time delivery metrics?
On-time delivery metrics are the measurement of how many loads are delivered on time. On-time delivery metrics are crucial when it comes to measuring your fleet’s efficiency.
These quantitative data points reflect your capability to fulfill customer orders without delays. These on-time delivery metrics also help you monitor the accuracy of your time estimations and assess your logistical efficiency and operational performance.
Factors that make measuring on-time delivery difficult include
- Volume of ordered goods. If you deliver 90 of the 100 ordered items, and the customers acknowledge the deficit, will this count as an OTD delivery? If you ship 80 products on time, and the end user allows receiving the remaining goods on a later schedule, will this be a 100% or 90% on-time delivery?
- Delivery date. Let’s say customers expect a package on May 29 and agree to receive the goods three days before, but also allow some leeway to accept the items three days after the promised date. If the items arrive within the six-day window, will you consider this an on-time delivery?
- Quantity of goods in the order. If customers purchase five different items in the same order, should you transport all five goods on schedule to obtain a 100% OTD delivery?
Delivery metrics can vary in terminologies, measurement methods, and variables from one company to the next. That’s why industry players need to define and agree on the standards and definition of “on time.”
Business owners and logistics companies can indicate these in their contracts, agreements, terms, and conditions.
On-time delivery performance example
On-time delivery metrics typically refer to a range of dates rather than specific ones. Most companies express them as X days before and Y days after the due date. A conventional OTD delivery window is five days earlier and zero days late.
Suppose a product is due to be delivered on September 1. You can deem the delivery on time if it reaches the end destination between August 27 and September 1. If it arrives beyond the first of September, the shipment will be considered late.
Is there an on-time delivery formula?
You can calculate the timeliness of a customer’s delivery with a basic on-time delivery KPI formula:
OTD = (Number of items delivered on time) / (Total number of deliveries) * 100
This calculation for the OTD delivery results in a percentage.
For example, if you successfully delivered 15 of 20 total shipments on schedule, your OTD would be 75%.
The wrong way to make an on-time delivery calculation
At its core, the on-time delivery KPI is meant to ensure you do what you said you’d do.
If a school ordered 50 laptops for teachers and you were able to ship 47 of them on time, you shouldn’t give yourself a score of 94%. Instead, you should record an on-time KPI score of 0%, because you failed to ship all of the laptops on time. Getting a 94% rating shows as if you did exceptional service and your customers didn’t encounter any difficulties.
In reality, three teachers didn’t receive their laptops on time,. It translates to hundreds of students having a less than stellar learning experience. When you manipulate your on-time delivery computations by focusing on quantities, you ignore the negative impact on your customers.
How do you improve on-time delivery metrics and KPIs?
Below are tips to improve your on-time delivery KPI and metrics.
- Set international OTD delivery goals. Use scorecards to measure and track your performance and reward drivers who reach the targets consistently.
- Listen to your drivers to uncover the causes of delays and bottlenecks. Ask them for recommendations on route planning improvements to incorporate into your fleet management plan.
- Establish clear communication lines with your suppliers, customers, and other parties involved. Agree on any mutually applicable KPIs and definitions and understand one another’s workflows. Ensure that you can quickly contact each party in case of emergencies or the need to modify plans.
- Leverage technology to boost the efficiency of your shipment and delivery workflows. This includes automating and updating materials with RFID scanners and conveyors. Software for route management and package monitoring can optimize processes and eliminate time-consuming steps.
How Motive helps boost OTD metrics
Boost your on-time delivery performance with Motive’s robust fleet management solution.
With the Motive fleet management solution, you can receive real-time data on your vehicles’ whereabouts. View historical location reports to determine routes you should avoid or choose. Select drivers with the best track records, and identify any potential maintenance problems your vehicles may have. If your commercial vehicles are nearing the end receiver’s location, our software can instantly send SMS notifications to them.
Driver safety and optimized product transport are among the many GPS benefits your fleet can experience with Motive.
The Motive fleet management solution centralizes crucial fleet management tasks to increase your operational efficiency, such as
- Vehicle dispatch and workflows
- Vehicle utilization and minimizing fuel consumption
- Vehicle inspection and maintenance
- Driving behavior improvement
- Regulatory compliance
These features help you optimize costs, reduce detention times, and increase productivity. They do it by providing rich analytics and in-depth insights.
Learn more about the Motive fleet management solution and how Motive is helping delivery fleet services increase productivity. Request a free demo today.