Best Practices for On-Time Delivery
On-time delivery is essential to long term, positive supplier/customer relationships. Indeed, while suppliers must consider a slew of operational issues and factors, such as HR, inventory, trade policies, national/international events, and cash flow, on-time delivery is among few direct experiences a customer has with a supplier’s transparency, accountability, and communication.
This article explores 1) OTD definition, 2) Measurements, 3) Resources, and 4) Improvement strategies that will help suppliers establish a long-term plan for ensuring on-time delivery.
On-Time Delivery Definition and Measurements
OTD is a calculation of total orders shipped divided by the amount of on-time deliveries. Rarely, do companies select a hard date, but rather establish a range of dates taking into account shipment/receipt dates; percent of items that arrived; customer/supplier expectations; and days in the week/month.
Does your customer define “on time” as the date the supplier shipped item(s) or receipt of the order? Where you send orders has an impact on shipment vs. delivery. Locally, there are fewer issues with shipping and logistics. However, when working with an out of the region or out of the country customer, it is essential to consider possible en route obstacles. Therefore, working with an export professional or contact your regional US Department of Commerce representative to gain an understanding of potential issues is a sure way to navigate those hurdles. In most cases, on-time delivery will reflect the delivery date, not the shipment date.
Does “on-time delivery” reference items within an order or the full order? Meta Fab considers on-time delivery to reflect the arrival of an entire order. Customers’ cannot fulfill obligations with only a fraction of equipment they need to complete their project. Therefore, if the customer can’t move forward with their work because they’re missing half of the supplier’s order, then full delivery is lacking. Holistically, your delivery schedule must recognize your customer’s obligations.
Expectations are essential to building a relationship with your customer and can change over time. As client needs change, so do supplier’s game plan for ensuring on-time delivery. In that vein, suppliers should conduct a quarterly (or in the case of very long-term customers) a bi-annual conversation with clients to catch expectation changes the customer did not communicate along the way.
Quite simply, account managers and clients should be on the same page regarding delivery dates. Suppliers and their ERP modules should incorporate holidays, closed days and other anomalies that can skew the range of dates for shipment and delivery.
Late deliveries are typically a symptom of a larger issue. Companies that frequently miss their delivery times may be experiencing one or more of the following issues related to 1) inventory; 2) staffing; 3) company culture; 4) operational logistics.
In addition to barcodes and product traceability platforms, there are internal, lean strategies for tracking and evaluating on-time delivery. Meta Fab uses a screen monitor system on the shop floor that displays orders, project status and scheduled delivery dates so all staff can see progress. Visibility enables the team to review and assess work orders and quickly revise workflow as necessary.
Industry organizations can also provide valuable support. For example, the Oregon Manufacturing Extension Partnership (OMEP) provides hands-on assistance that includes internal process evaluations, which help companies identify inefficiencies that delay deliveries. As mentioned earlier, the U.S. Department of Commerce and export professionals can also provide assistance in identifying trends and external factors that impact product delivery. Most of all, work with your local economic development departments at the city and state levels to make sure you’re leveraging support and programs for your business.
Improving on-time delivery can only occur after a thorough evaluation of processes, which is why industry support is so useful. Things to consider are inventory, staffing, transparency, and company culture.
Are your purchase orders in step with your customers’ deadlines? Similarly, is your ERP set up to conduct routine inventory reviews? A combination of training and software helps suppliers manage their inventory to prevent shortages.
Are you adequately staffed? Temp services to cover busy times in the year avoid unnecessary labor costs year-round. While related to company culture, staffing also requires thorough and ongoing training so staff understands measurements, deadlines, processes, and priorities. If the staff is confused or missing deadlines, then training modules aren’t effective and must be reviewed/revised.
Customers understand that unanticipated events can impact on-time delivery. Similarly, where customers grow frustrated is when suppliers overestimate their capacity to delivery by a set date or when a supplier does not adequately notify customers of pending issues that could create delays. By keeping customers in the loop, suppliers demonstrate honesty and transparency, which helps customers plan accordingly.
Thorough, Ongoing Training:
Staff training should include an onboarding system with written materials and visuals. Copies of training materials should be available at work stations so employees can review protocol. Consider issuing a quiz each quarter to gauge staff’s appreciation for their role and their understanding of relevant steps/processes for their position. Remember – just as in school, quizzes are designed not to punish, but to check for understanding so it’s best to allow employees to demonstrate their understanding in a format that works best for them – in writing, orally or in a demo.
Is staff comfortable sharing their concerns and questions? A big challenge for many companies is a disconnect between employees and management where management is perceived to wield far more stick than carrot. Along with ongoing training, management should consistently seek employee input, provide tools for improving performance, and willingness to offer flexibility in managing diverse workers. Having open conversations with your staff about their needs is the best way to further a successful management plan.
A team focus is where employees not only understand their own roles but understand co-worker obligations. In contrast, a disconnect between employees means the right-hand doesn’t know what the left hand is doing and fosters indifference, which in turn leads to frustration, slower paced production, and mistakes. Build a team where employees understand the bigger picture, what each must do to be successful in their respective roles, and where individuals root for each other from welders, engineers, and powder coaters to account managers and accounting staff.
Accountability is essential in manufacturing. Like quality control, a company’s sense of accountability directly impacts on-time delivery, which is undoubtedly a top-down concept. Furthermore, management must establish and demonstrate expectations through clear and consistent communication. Accountability effects work ethic as well. Management can reinforce work ethic through rewards, transparency, communication and positive incentives far better than reprimands and criticisms. Quarterly assessments will also help staff understand their strengths and weaknesses and provide management an opportunity to offer support where staff might not have known to request it. As the adage goes, “we don’t know what we don’t know”.
As employers, our business is our passion, but at times we overlook the fact that a paycheck alone doesn’t satisfy workers’ need for motivation and validation. Therefore, to encourage workers’ appreciation for our vision, we must implement and follow a company culture that recognizes our employees’ value and contribution to our collective accomplishments. The following are suggestions for promoting worker happiness and satisfaction:
- An employee of the Month
- Corkboard where employees can post photos of their families, pets or vacation trips
- Birthday celebrations
- Bonuses for good performance
- ‘Thank You’ cards
- Suggestion cards and non-intimidating opportunities to share input and/or concerns
- Holiday/seasonal employee parties
No singular suggestion can address worker disconnect or dissatisfaction. Fundamentally, companies that want to motivate their employees must recognize that production cannot take place without labor and only when a company truly recognizes the value of labor will workers fully apply themselves.
In short, on-time delivery is a team effort to ensure customer satisfaction. How a company achieves on-time delivery is a signal of operational health or shortfalls. To accomplish on-time delivery, therefore, companies should:
- Incorporate consistent assessments of on-time delivery
- Utilize resources that promote efficiency and offer support
- Maintain clear and transparent communication with customers
- Foster a company culture where employees understand and follow protocol, support co-worker success, offer input with impunity, and feel appreciated.