13 Possible Nightmares That Stops You to Provide Great On-Time Delivery Performance

On-Time Delivery Performance is one of the key metric in Supply Chain which represents customer service levels an organisation is providing with given resources.

Why do we want to measure On-Time Delivery Performance?

 

It is primary metric in order to drive continuous improvement of service levels and differentiate our service offering from your competitors. It is the best way to understand the lead time requirements of customers.

What is On-Time Delivery Performance?:

 

  • This metric measures on-time performance to customer’s requested ship date (Goods Issue Date) at the sales order line level.
  • Schedule line percent on-time and complete to the customer requested date, no penalty for early shipment (-infinite to +0 day window). This varies amongst organisation.
  • Measurement is when the order line is due to ship. Total number of lines expected to be shipped during a given period of time vs how many of those lines were on time.
  • Total lines shipped include: External customers, third party, inter-company.

 

What is the Calculation?? (typical)

 

On-Time is:   # of order lines that shipped on or before Customer Requested Ship Date   %

Total # of Order lines with Customer Requested Ship Date in Period

 

Why should we analyse On-Time Delivery Performance?

 

Detailed analysis of actual performance can reveal :-

  1. Intermittent failure to meet customer requirements due to problems in the supply chain.
  2. More fundamental gaps between the customers requirements and the set up of the supply chain to meet those requirements.

On-Time Delivery Performance

What analysis should be done for On-Time Delivery Performance?

 

We must root cause the reasons for failure and identify corrective actions. A Pareto analysis of the missed lines should be done atleast daily if not weekly. I would recommend teams should close any fundamental gap between customer requirements, the planned lead time built into the Supply Chain planning and execution system.

To help community I thought it would be good idea to share possible root cause codes which you can use to attribute as root cause of On-Time Delivery performance miss and analyze. Here is 13 key head line root cause codes with further sub headings.

1          Manufactured Part Delay                                        

1a                    Capacity – Equipment constraint

1b                    Capacity – Staffing constraint

1c                    Machine Repair

1d                    Tooling / Programming

1e                    Forecasting error

1f                     Engineering Backlog

 

2          Purchased Part Delay           

2a                    Vendor Late – Ordered On Time

2b                    Vendor Late- on Credit Hold

2c                    Container Delay/Import Shipping Delay

 

3          Quality Issue 

3a                    Purchased Part

3b                    Manufactured In House

3c                    Inter-Company Part

3d                    Engineering / Documentation/Drawing

 

4          Inter-Company Delay

4a                    Shipped Late – Ordered On Time

4b                    Shipped On Time – Transportation Delay

 

5          Assembly Late

5a                    Capacity Constraint

5b                    Priority Error – Supervisor

5c                    Test Equipment Problem

 

6          Inventory Adjustment         

6a                    Warehouse

6b                    Shop Floor

 

7          Shipping / Distribution        

7a                    Delivery Created Late

7b                    Late / Carryover

7c                    Late / Transportation

7d                    Receiving Delay

 

8          Planning Functions

8a                    Bad Commit Date

8b                    Not Ordered On Time (Purchased)

8c                    Not Released On Time (Manufactured)

8d                    Planner did not reschedule production order

8e                    Planner did not reschedule purchase order

8f                     Planner misjudged reschedule date

8g                    Planning parameters not correct

 

9          Data Problems          

9a                    Bad B.O.M

9b                    Bad Route

9c                    Other Data Error

 

10        Export / Ship Complete / Direct     

10a                  External Customer Inspection Delay

10b                  Customer / Shipping Instruction Delay

10c                  Line Available – Order Not Complete

10d                  Ship complete designation removed/added

 

11        Blocked Orders         

11a                  Credit Hold

11b                  Delivery Block

 

12        Front-End Engineering / New Item

12a                  Order Entry Mistake

12b                 Customer request date not correct

12c                  Partial shipment, balance did not drop

12d                  Order Line qty error

12e                  Customer requested future delivery date

 

13        Customer Requested Date Error     

13a                  On-Time Delivery dating error misc.

13b                 No date was requested – On-Time Delivery does not match

13c                  Date was requested – customers date not entered in system

In Conclusion I have outline this definition specially for business in manufacturing and distributions of goods and most of the cause codes are related to manufacturing business. Non-manufacturing business may have their own root cause codes, but logic should be same.

Please do let me know if I have missed any possible root cause codes for On-Time Delivery Performance miss in manufacturing environment?

 

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