One of the simplest ways your ecommerce business can ensure customer satisfaction is by perfecting the delivery process. Customers expect on-time deliveries and total order accuracy. You can assess your ability to meet this expectation with a supply chain metric called “on-time, in-full,” or OTIF.
Measuring the OTIF performance of your business can be a strategic move toward supply chain excellence. Here’s a deeper look at OTIF and the formula for calculating your own OTIF scores.
What is OTIF?
On-time, in-full (OTIF) is a supply chain performance metric that measures the percentage of orders delivered to customers on time and with all correct items in the shipment. Businesses measure OTIF to audit their supply chain processes and assess whether they have the operational efficiency needed to meet their order fulfillment and delivery promises.
On-time, in-full metrics can tell you a lot about your supply chain operations, logistics providers, and warehouse management system: Do suppliers keep your supply chains flowing efficiently, and do you keep inventory levels high enough to meet customer demand? Once you receive products from suppliers, are you moving them to the right stores, warehouses, and distribution centers? Are your shipping partners continuously providing on-time delivery to your customers?
OTIF metrics improve supply chain visibility, letting you answer these questions, optimize your production and logistics processes, and increase customer satisfaction.
How to calculate OTIF
The OTIF formula is an average of two key metrics: on-time delivery and in-full delivery. A high OTIF score requires few late deliveries and few incomplete deliveries. Here’s an explanation of each individual metric and how they combine into a single OTIF score.
On-time delivery
The “on-time” component of OTIF measures the percentage of orders delivered on or before your promised delivery date. Late deliveries can lead to low OTIF scores.
Calculate on-time delivery using this formula:
On-time delivery (%) = (Orders delivered on-time / total orders) x 100
Providing reliable on-time delivery can boost your OTIF rate and meet customer expectations.
In-full delivery
The “in-full delivery” half of OTIF measures the percentage of orders delivered with the complete quantity of items. For instance, if your customer received a package from you within the planned delivery window, but that package was missing one of the four items ordered, you haven’t executed an in-full delivery. Ensuring delivery of a customer’s complete order will improve OTIF performance.
Calculate in-full delivery with the following formula:
In-full delivery (%) = (Orders delivered in-full / Total orders) x 100
OTIF formula
An OTIF calculated from the above two metrics provides a picture of your supply chain performance. The OTIF formula is:
OTIF (%) = (Orders delivered on-time and in-full / Total orders) × 100
Under the standard OTIF definition, neither a complete order that experienced delivery delays nor an on-time order missing items meet the OTIF threshold. Only orders that fulfill both benchmarks can contribute to a good OTIF score.
For example, let’s say your ecommerce business processes 1,000 orders in a given month. Out of these:
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900 orders were delivered on or before the promised date (i.e., on-time)
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950 orders were delivered with all items included (i.e., in-full)
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850 orders were both on-time and in-full (i.e., OTIF)
Improving OTIF performance requires fixing the 100 orders that didn’t arrive on time and the 50 orders that were missing items.
What is a good OTIF score?
Your OTIF score depends on multiple factors, including your industry, consumer demands, and supply chain partnerships. In general, if your operations are more complex, you’ll face more OTIF challenges, like production delays, supply chain disruptions, internal inventory management complications, and issues with logistics companies.
Ecommerce businesses often work with standards set by industry leaders like Amazon and eBay. Amazon requires its third-party sellers to maintain an OTIF compliance of at least 90%. This can serve as a good OTIF benchmark for your ecommerce business, but if you ship perishables or medical supplies, you’ll need to set higher OTIF goals. For instance, if you ship perishable cosmetic products, your consumer will have higher OTIF expectations.
An example of good OTIF performance
Let’s say an online home goods store sets a target OTIF of 95% to compete with larger platforms while managing their growing order volume. In one month, the company receives 2,000 orders. It delivers 1,850 of these orders on time, and it ships 1,920 of these orders in full. The overlap of both on-time and in-full is 1,780.
When you calculate the OTIF metrics using the formulas outlined above, you end up with the following OTIF percentages:
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On-time delivery: (1,850 / 2,000) x 100 = 92.5%
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In-full delivery: (1,920 / 2,000) x 100 = 96%
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OTIF: (1,780 / 2,000) x 100 = 89%
An 89% OTIF is strong but below their target. To improve customer satisfaction and meet present-day market demands, the home goods business creates a continuous improvement initiative that emphasizes OTIF strategies.
OTIF improvement strategies for Shopify merchants
- Optimize your inventory management
- Improve delivery timelines
- Leverage your order management system
- Use Shopify Analytics for actionable supply chain management insights
- Automate email and SMS communication
- Partner with the Shopify Fulfillment Network (SFN)
Running your own ecommerce business means you answer to only one boss: you. But this also means analyzing your supply chain efficiency and performance may also fall to you. Shopify has tools to identify potential delays and address issues before they’re a problem, helping you improve your OTIF and gain a competitive advantage within your industry. Here are six steps Shopify merchants can take to get a leg up:
1. Optimize your inventory management
Use Shopify’s built-in inventory management features to track stock levels in real time and ensure sufficient quantities of high-demand products. Over time, you’ll be able to track supplier performance and potentially identify choke points in replenishing your stock. You can also use third-party apps like Stocky to forecast demand and automate reordering, helping you satisfy the “in-full” component of OTIF.
2. Improve delivery timelines
Use Shopify’s shipping features to streamline logistics and team up with reliable carriers that offer real-time tracking and faster delivery options. Certain carriers also offer discounted rates through their partnership with Shopify Shipping. Compare rates and estimated delivery times, and choose the best option for you to satisfy the “on-time” component of OTIF.
3. Leverage your order management system
Centralize your order processing with Shopify’s order management system to reduce errors and streamline fulfillment. This helps ensure every order is picked, packed, and shipped accurately and promptly. Use the Fulfillment Priority feature to automatically route orders to the closest fulfillment center. Integrate apps like ShipStation for batch processing and multi-carrier support.
4. Use Shopify Analytics for actionable supply chain management insights
For increased customer satisfaction, identify patterns in late or incomplete orders and address the root causes of those issues. Access sales reports and order reports in Shopify’s analytics tools to review fulfillment trends and use third-party analytics tools like Better Reports for deeper insights into fulfillment metrics.
5. Automate email and SMS communication
Avoid customer dissatisfaction by ensuring strong communication. If you encounter any unforeseen delays, keep customers informed and manage expectations. Tools like Shopify Email and Shopify Flow can trigger notifications when orders are shipped or delayed via email or SMS. You can also integrate apps like Klaviyo to personalize email updates.
6. Partner with the Shopify Fulfillment Network (SFN)
Shopify Fulfillment Network (SFN) is a fulfillment service app to monitor stored inventory and oversee order fulfillment. The SFN is powered by Shopify’s partner Flexport and helps house your merchandise in one or more fulfillment centers, ideally as close to your customers as possible. It also grants you access to fast, affordable shipping solutions, and helps you manage customer returns. Using the SFN comprehensively improves OTIF by reducing transit times and fulfillment errors.
OTIF FAQ
What is the meaning of OTIF?
OTIF stands for “on-time, in-full,” and measures how often your packages reach customers by the promised delivery date with everything the customer ordered.
What is the difference between OTD and OTIF?
OTD stands for “on-time delivery,” and it exclusively measures whether a shipment arrived on time. OTIF stands for “on-time, in-full,” and measures both on-time shipments and order accuracy.
When is it important to start tracking your OTIF shipments?
The faster your ecommerce business grows, the more important it is to measure OTIF. A larger customer base means higher sales volume, making it easier for mishandled orders to slip through the cracks. This can lead to customer dissatisfaction and lost sales down the road. Start tracking early to stay ahead of the game.