The Importance of High On-Time Delivery Rates

In an industry where materials are being shipped out every day, high on-time delivery rates (OTDRs) serve great importance to a manufacturing company.

On-time delivery (OTD) is the main metric used to measure the efficiency of supply chain processes in an organization. It is an indicator of how capable your organization is to meet customer demand in terms of the requested delivery date (RDD). Failing to meet your customers’ requests can lead to all sorts of negative outcomes. Worst case? You lose your customers to competitors.

At O’Neal Manufacturing Services (OMS), we take pride in our exceptionally high on-time delivery rates in Indianapolis, Indiana. In order to appreciate high OTDRs, it is important to first understand what OTD encompasses.

A multitude of measurement factors influence OTD, these being working days vs. calendar days, ship date vs. dock date, promise date vs. required date, original promise date vs. revised promise date, percent of line item vs. percent of quantity ordered, and purchaser vs. supplier data. There is often confusion regarding these measurement factors, and it is important for customers and suppliers to be on the same page to ease the delivery process. Common questions include “Do five days early include weekends and holidays,” or “Does OTD date refer to the shipment date or date received?” When scheduling a delivery, a decision must be made to go by the working day or calendar day to settle misunderstanding regarding weekends and holidays. To determine the OTD date, the most common practice is to use the dock date, when the item is received. As deliveries can lead to easy confusion, communication is key between suppliers and customers.

According to records on The Fabricator, a publication of the Fabricators and Manufacturers Association (FMA), OTDRs have remained in the mid-80 percent range for years now. OMS Indianapolis has blown these numbers out of the waters with an OTDR of 99%.

Federico Fraga, General Manager, shared some insight on how Indianapolis operates and maintains such high OTDRs. Fraga expressed that Indy follows their sales and operations planning (S&OP) process each month and plans accordingly with resource forecasts such as machining capacity, personnel, and material. The facility then sends information from these forecasts to suppliers who will prepare for the required volumes. Indy’s production control team schedules orders according to due dates, while they monitor machine availability and capacity every week. Fraga shared that OTD and past dues are monitored daily, while weekly group analyses are conducted to distinguish what is produced and what is past due. If the team is ever behind on an order, they catch back up by placing more resources on the machine or working overtime.

As The Fabricator indicates, majority of companies struggle with OTD because of demand spikes or miscommunication with customers. Fraga ensures our facility in Indianapolis is stocked with the necessary resources to meet demand, while maintaining constant communication with customers to prevent confusion. In fact, a daily production meeting is conducted to discuss orders and priorities with customer service representatives (CSR) for clarification.

Through superb communication skills and production monitoring, OMS Indianapolis continues to sustain high on time delivery rates. Way to go! #LetsBuildThings