The OTIF Driver
On-time in-full (OTIF) is a relatively new concept that stems from a single driver: customer demand. As consumers become increasingly accustomed to locating, purchasing, and receiving products in a matter of days, their tolerance for anything outside of this new norm is relatively low. Even with understandable circumstances, such as a major weather event that delays shipment, consumers still expect the company from which they purchased their goods will have alternative plans to ensure on-time delivery of those products.
This demand may begin with the consumer, but it quickly fuels manufacturers, suppliers, shippers, distributors, and retailers to keep up. In order to meet consumer demand, the supply chain has had to step up their speed and efficiency without sacrificing quality. Big box stores know that empty shelves or overstocked warehouses have a significant cost. Empty shelves frustrate customers and risk customer attrition. Overstocked warehouses consume precious space and resources and introduce risk for unsold inventory.
There’s a fine balance that retailers must strike and that’s prompting more of them to implement OTIF programs that hold suppliers accountable for delivering products on-time and in-full or else face a chargeback fee. It may be the only way to distribute the share of responsibility in ensuring products make it to the end user in good condition when expected. The entire supply chain must work in lock-step to make this happen and now, with OTIF requirements, there is greater incentive to put systems and practices in place to facilitate such programs.
With so many factors contributing to successful OTIF deliveries, it’s easy to see why achieving such benchmarks isn’t a given, even with the risk for fines. SupplyChainDive.com says some issues can be traced to human factors, such as mistakes in packing, communication, and transportation delays. But transportation delays aren’t always due to human error or inefficiencies. In fact, transportation delays are one of the most unpredictable because many of them are due to weather events, natural disasters, infrastructure outages, and social hazards. Many of these issues are, for many, unforeseen, but with the right technology, we can predict them with greater accuracy so organizations can prepare, plan, and set the right expectations.
Making The Unpredictable Predictable
Not everything can be predicted, but there is modern technology that is bringing greater visibility into the unknown. This visibility is impossible to achieve using outdated systems or worse, manual efforts. There are simply too many variables for these inefficient methods to consider. Gartner believes visibility is the key to OTIF, saying, “Shippers who embrace supply chain visibility solutions can expect up to 10% increase in ‘The Perfect Order’ performance metric.”
Supply chain visibility must look into every potential risk, including those transportation delays mentioned by SupplyChainDive.com. Labor shortages may have an impact, but it’s the weather, natural disasters, infrastructure issues and other factors that likely play a more prominent role. Many of these risks are grossly underestimated simply because companies lack the proper technology to see them, much less make sense of it all, particularly in context with every shipment every day.
If OTIF is to be achieved, suppliers, shippers, and LSPs must all be able to identify all risks to on-time in-full deliveries early enough in the timeline to be able to plan ahead and mitigate those risks. This is virtually impossible to do with manual efforts or outdated systems. With the right technology, one that is able to collect and analyze large amounts of data instantly, companies can be proactive, responsive, and effective in their OTIF programs.
Intelligent analytics, for example, is able to automatically and continually monitor the location and contents of each shipment throughout its journey from pick-up to delivery, seeing in real-time every risk factor that shipment faces. Even better, the software can look at each shipment a week or more in advance to predict the most likely risk factors to impact the shipment and offer recommendations on which mitigation strategy will be most effective. It combines predicted weather along the entire journey at the precise time the freight will be in that particular area.
With visibility into not only the risks but the likelihood and severity of those risks, as well as which ETA is most accurate, business leaders are empowered with accurate data to inform decisions proactively. They can alter lanes, the mode of transportation, shipment dates, etc. ahead of time to either ensure shipments arrive on-time and in good condition, or set the appropriate expectations with the customer in advance to avoid penalties reputational damage.
The entire supply chain can benefit from such insights. Each of the supply chain entities needs to know their risks in getting their parts and products to their destinations on time and in full, even when the weather or infrastructure issues threaten their delivery. This is particularly critical during peak seasons when their goods are in the highest demand.
Meeting Commitments and Setting Accurate Expectations
OTIF commitments are, in essence, a promise. When suppliers, shippers, and third-party logistics providers say they will deliver the right product on a specific date in perfect condition, their customers depend on it. When they have visibility into the risk factors that threaten these commitments, they can set the right ETAs and expectations with their customers so their customers can plan and keep the supply chain humming.
It’s one thing to say a shipment will make it to its destination on a certain date and time, but without predictive data, those ETAs are just guesses. Predictive intelligence is the key to shifting best guesses into reliable commitments that impact the entire supply chain. Riskpulse offers suppliers, shippers, and LSPs an OTIF program that combines real-time and predictive data to provide never-before insight into the risks to shipments and the viable alternatives to mitigate those risks – on every single shipment. The system considers more than 60 different factors in context of each other, such as weather and climate threats, infrastructure outages, natural disasters, social hazards, equipment type, lanes, and type of cargo, to determine the likelihood of different scenarios that could impact OTIF commitments.
This kind of technology is changing logistics and giving the supply chain more predictability, even at the granular level. For instance, users can set an exact ETA for delivery and see the probability of their shipment actually being delivered at that time given the various potential risk factors. When the logistics professional sees one scenario having a 60 percent chance of the shipment being later than that ETA, another scenario where there’s a 30 percent chance of the shipment being earlier, and yet another scenario where there’s a 10 percent chance of it being on time within 10 minutes of the ETA, they can make a smarter decision on which action to take.
Understanding risks is only the first step, yet it is often where many solutions focus. With Riskpulse, users see risks along with actionable data that speeds and informs critical decisions. The key is having this data well-enough in advance to make those decisions before risks impact your ability to meet OTIF commitments. For shippers, you can provide more precise ETAs with confidence because they are backed with reliable predictive data that considered all likelihoods and severities of risks. For receivers who are dependent upon these OTIF commitments, you can use the Riskpulse ETA API to have visibility into your shippers’ actions and have greater assurance that your suppliers will meet your OTIF requirements and if not, you can plan ahead.
Manual efforts and obsolete tools that only paint a partial picture of risk without offering predictive intelligence to speed decisions present their own risks. Having ETA probability scores across various scenarios is a powerful and effective method to make and adhere to OTIF commitments. This isn’t to say all risks are completely predictable or avoidable, but with actionable data at your fingertips a week or more ahead of a shipment, you can be proactive in mitigation efforts that help you set the right expectations and meet OTIF commitments.