On-Time Delivery Performance is one of the key metric in Supply Chain which represents customer service levels an organisation is providing with given resources.
Why do we want to measure On-Time Delivery Performance?
It is primary metric in order to drive continuous improvement of service levels and differentiate our service offering from your competitors. It is the best way to understand the lead time requirements of customers.
What is On-Time Delivery Performance?:
- This metric measures on-time performance to customer’s requested ship date (Goods Issue Date) at the sales order line level.
- Schedule line percent on-time and complete to the customer requested date, no penalty for early shipment (-infinite to +0 day window). This varies amongst organisation.
- Measurement is when the order line is due to ship. Total number of lines expected to be shipped during a given period of time vs how many of those lines were on time.
- Total lines shipped include: External customers, third party, inter-company.
What is the Calculation?? (typical)
On-Time is: # of order lines that shipped on or before Customer Requested Ship Date %
Total # of Order lines with Customer Requested Ship Date in Period
Why should we analyse On-Time Delivery Performance?
Detailed analysis of actual performance can reveal :-
- Intermittent failure to meet customer requirements due to problems in the supply chain.
- More fundamental gaps between the customers requirements and the set up of the supply chain to meet those requirements.
What analysis should be done for On-Time Delivery Performance?
We must root cause the reasons for failure and identify corrective actions. A Pareto analysis of the missed lines should be done atleast daily if not weekly. I would recommend teams should close any fundamental gap between customer requirements, the planned lead time built into the Supply Chain planning and execution system.
To help community I thought it would be good idea to share possible root cause codes which you can use to attribute as root cause of On-Time Delivery performance miss and analyze. Here is 13 key head line root cause codes with further sub headings.
1 Manufactured Part Delay
1a Capacity – Equipment constraint
1b Capacity – Staffing constraint
1c Machine Repair
1d Tooling / Programming
1e Forecasting error
1f Engineering Backlog
2 Purchased Part Delay
2a Vendor Late – Ordered On Time
2b Vendor Late- on Credit Hold
2c Container Delay/Import Shipping Delay
3 Quality Issue
3a Purchased Part
3b Manufactured In House
3c Inter-Company Part
3d Engineering / Documentation/Drawing
4 Inter-Company Delay
4a Shipped Late – Ordered On Time
4b Shipped On Time – Transportation Delay
5 Assembly Late
5a Capacity Constraint
5b Priority Error – Supervisor
5c Test Equipment Problem
6 Inventory Adjustment
6b Shop Floor
7 Shipping / Distribution
7a Delivery Created Late
7b Late / Carryover
7c Late / Transportation
7d Receiving Delay
8 Planning Functions
8a Bad Commit Date
8b Not Ordered On Time (Purchased)
8c Not Released On Time (Manufactured)
8d Planner did not reschedule production order
8e Planner did not reschedule purchase order
8f Planner misjudged reschedule date
8g Planning parameters not correct
9 Data Problems
9a Bad B.O.M
9b Bad Route
9c Other Data Error
10 Export / Ship Complete / Direct
10a External Customer Inspection Delay
10b Customer / Shipping Instruction Delay
10c Line Available – Order Not Complete
10d Ship complete designation removed/added
11 Blocked Orders
11a Credit Hold
11b Delivery Block
12 Front-End Engineering / New Item
12a Order Entry Mistake
12b Customer request date not correct
12c Partial shipment, balance did not drop
12d Order Line qty error
12e Customer requested future delivery date
13 Customer Requested Date Error
13a On-Time Delivery dating error misc.
13b No date was requested – On-Time Delivery does not match
13c Date was requested – customers date not entered in system
In Conclusion I have outline this definition specially for business in manufacturing and distributions of goods and most of the cause codes are related to manufacturing business. Non-manufacturing business may have their own root cause codes, but logic should be same.
Please do let me know if I have missed any possible root cause codes for On-Time Delivery Performance miss in manufacturing environment?
About the Author- Dr Muddassir Ahmed
Dr MuddassirAhmed is the Founder & CEO of SCMDOJO. He is a global speaker, vlogger and supply chain industry expert with 17 years of experience in the Manufacturing Industry in the UK, Europe, the Middle East and South East Asia in various Supply Chain leadership roles. Dr. Muddassir has received a PhD in Management Science from Lancaster University Management School. Muddassir is a Six Sigma black belt and founded the leading supply chain platform SCMDOJO to enable supply chain professionals and teams to thrive by providing best-in-class knowledge content, tools and access to experts.