# On-time delivery (OTD)

## What is on-time delivery?

On-time delivery (OTD) is an important measure of the performance of your manufacturing operation. On-time delivery refers to how many orders are completed in a specified time frame. OTD can be measured on a first-in, first-out (FIFO), or last-in, first-out (LIFO) basis. The difference lies in how they treat finished goods inventory held off the shelf that has yet to be sold by customers and may not be immediately needed.

## How is on-time delivery measured?

To measure on-time delivery, you'll need to determine how long each project takes and then add all those numbers together. For example, if your average project duration was 30 days (about four and a half weeks) and you completed five projects last month with an average completion time of 12 days (about one week five days) each, then your total on-time delivery score would be 60 days (12 days x five projects).

This 60-day score can be used to determine if projects are running smoothly or not by comparing it to your general averages of project duration. It's important to note that this isn't how you calculate your on-time delivery. A specific calculation details OTD.

## How is on-time delivery calculated?

On-time delivery is calculated by taking the total number of orders shipped on time and dividing it by the total number of orders promised, then multiplying it by 100 to get a percentage. This is the formula:

On-time deliver

=

Orders shipped on time  ÷

Total orders

× 100

For example, if 250 orders were shipped on time by 300 was the total number, you would get 0.83 and multiply that by 100 to get 83.3% as your OTD.

## What are some examples of on-time delivery?

Some common examples of on-time delivery include delivering a:

• Product on time
• Service on time
• Project on time
• Shipment on time

## What are the benefits of calculating on-time delivery?

There are many benefits to calculating on-time delivery, including that:

• It's a key performance measure for your company, which means that it can be used to measure the performance of individual departments and employees. This can help identify areas where there are problems with meeting deadlines or completing projects on time. Once these areas are identified, you can implement systems to fix them before they become serious issues.
• It also allows you to assess suppliers' performance against your standards for delivering products or services on schedule (and in good condition). Suppose a supplier is consistently late or needs help meeting quality requirements. In that case, it may be time to look at other options when making future purchases from them—or even drop that supplier altogether if they cannot meet their regular commitments.

## Tips for keeping your on-time delivery rate high

Here are some tips to keep in mind for your team when you want to keep your on-time delivery rate high:

• Keep your team from getting behind. Ensure you're staying on top of things and not letting progress slow down.
• Keep your team from getting overworked. If they're feeling overwhelmed, it's time to consider setting up systems to help with time management. It'll be easier for them to stay focused on the project and deliver quality work on time if they have a tool to help them.
• Ensure you have suitable systems and technologies to support your team and keep your assets and equipment running smoothly (i.e., a CMMS).

## On-time delivery is a critical metric that manufacturers use to track the performance of their operations

On-time delivery (OTD) measures how quickly you can complete projects. Tracking this metric is important because it shows if your team is meeting expectations.