This important KPI for operations, known as the On-Time Delivery Ratio, measures the percentage of orders that are delivered on time. A successful business must have an efficient delivery process, and this metric is a great indicator of the reliability and effectiveness of the delivery process. It is a fundamental measure of success in operations, as timely delivery can ensure customer satisfaction and encourage repeat business.
Example
If an organization has a goal of delivering 95% of orders on time, they have achieved a KPI of 97% if they actually deliver 97% of orders on time.
Calculation
To calculate operational on-time delivery (OTD) in a supply chain or logistics operation, you can use the following formula:
Operational OTD = (Number of orders delivered on time / Total number of orders) x 100
This formula calculates the percentage of orders that were delivered within the agreed-upon delivery time frame. To use the formula, you will need to track the total number of orders and the number of orders that were delivered on time.
For example, if a company received 100 orders in a given time period and 90 of those orders were delivered on time, their operational OTD would be (90 / 100) x 100 = 90%.