Why is on-time delivery so important?
On-time delivery (OTD) is one of the primary distinguishing factors manufacturers use to differentiate their product offerings from competitors. It is the measurement that helps drive continuous improvement and helps you determine lead time requirements of your customers. OTD is also the main measurement that determines whether your supply chain processes are efficient.
Recently, Ray Attiyah, author of Run Improve Grow, was asked to be the keynote speaker at a Job Shop Supplier Symposium. While the Run Improve Grow business theory is focused on continuous improvement, the suppliers were asked to determine why they were having trouble delivering their products on time to their primary accounts. (We were given a little insider information—most of the suppliers at the symposium did not meet the on-time delivery goals for their primary customer).
Ray asked them to evaluate two areas of their process: the execution (skills needed to get the parts out the door on time) and their systems (the process they had in place to manage and produce orders).
- Execution: We have a great system, but we are not consistent in doing what the system demands
- Systems: The symptoms are not related to poor execution but systemic failure
Manufacturers may think that execution is the primary reason they can’t produce and get orders out the door on time. Instead, it’s often their system for managing orders that is causing the delays. OTD haunts many manufacturers, not necessarily because your team isn’t performing up to par. Often OTD is troublesome because your suppliers aren’t getting parts to you as quickly as promised, or your projections to your suppliers vary too much month to month and the unpredictability is hard to manage. From systems issues including supplier management to execution, discovering the root cause of OTD delays is crucial to solving the issue and developing your standards of manufacturing excellence.
OTD analysis can reveal:
- Lack of accurate or dependable systems to manage, monitor and measure the production process
- Gaps in employee training and standard operating procedures causing delays, poor quality and cultural struggles as your teams feel unsuccessful
- Intermittent failure to meet customer requirements due to problems in the supply chain
- More fundamental gaps between the customers’ requirements and the setup of the supply chain to meet those requirements
Depending on where you are on the supply chain, the systems you have in place to produce your products quickly and efficiently are often misaligned, causing backups, downtime due to lack of parts, re-work delays and even worse, production errors or defects due to ill-equipped employees and lack of measurements and SOPs.
Delivery factors that cause OTD calculation issues:
- There is no clear distinction how the number of units on time is calculated
- OTD calculation reference points are not clear or defined
- Some use the day they shipped the product rather than the actual day it is delivered to the customer to calculate OTD
- Other organizations ship product early without customer approval and then try to use this to positively affect their OTD rate
- Often, there is confusion about the delivery window
Typically, the root causes for these issues are undefined metrics, KPIs and measurement requirements. But the underlying root cause of OTD might not have anything to do with the list above. The underlying root cause to issues with OTD could be due to poor planning and systems and operational issues that need to be tackled.
We developed a list of possible “symptoms” to help you identify where you have shortcomings regarding on-time delivery.
- We have lots of material, but not the right material in-house
- We thought we had the needed quantity of material in-house, but are short
- Our supplier told us we’d have the material sooner, but they didn’t deliver when they said they would
- We don’t have enough machines
- We have enough machines, but they are busy running other parts
- We have enough machines, but they are not reliable
- We don’t have enough of the right machines
- We don’t have enough people to run the machines
- We don’t have trained people to run the machines
- Our people don’t show up reliably
- We can’t keep people
- We schedule our machines poorly
- We schedule our machines well, but we rarely meet our schedule
- We really don’t schedule
- We take a lot longer than planned before the job gets to production
- We don’t really have a way to track jobs
- Our setups take longer than planned
- We don’t really have a setup time
- We don’t have machine run standards
- We have lots of machine idle time and don’t know why
Did you answer yes to one or more of these issues? Let us help get you on track.