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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.
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.
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.
Some common examples of on-time delivery include delivering a:
There are many benefits to calculating on-time delivery, including that:
Here are some tips to keep in mind for your team when you want to keep your on-time delivery rate high:
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.
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