On-Time Delivery
OTDOn-Time Delivery (OTD) is a performance metric that measures the percentage of orders shipped to customers on or before the promised delivery date.
On-Time Delivery (OTD) is a key performance indicator (KPI) used in manufacturing to track supply chain and production reliability. It calculates the ratio of orders shipped on time compared to the total number of orders shipped in a period. A high OTD rate indicates that a company's operations, from order processing to final shipping, are efficient and predictable.
This metric directly impacts customer satisfaction and retention. Consistently meeting delivery dates builds trust with customers. It also helps them manage their own inventory and production schedules. For manufacturers, tracking OTD helps identify operational issues. A declining OTD rate can signal problems like production bottlenecks, inaccurate lead time estimates, supplier delays, or poor inventory management.
To measure OTD accurately, a manufacturer must first define what “on time” means. This is typically the date the order is scheduled to leave the shipping dock, as agreed upon with the customer. The calculation uses data from Enterprise Resource Planning (ERP) or Manufacturing Execution Systems (MES). These systems record the promised ship date and the actual ship date for every order.
Improving OTD involves several shop floor practices. Accurate production scheduling ensures that jobs are prioritized correctly. Real-time monitoring of work-in-progress helps supervisors spot potential delays early. Effective inventory control prevents stockouts of raw materials or components. Clear communication between sales, planning, and production teams aligns expectations with shop floor capacity.
A custom metal fabrication shop shipped 400 orders in May. Of those, 388 were shipped on or before the date promised to the customer. The shop's OTD rate for May was 97% (388 / 400 * 100).
What is a good On-Time Delivery rate?
Most manufacturers aim for an OTD rate of 95% or higher. The specific target can vary by industry and customer expectations.
Does OTD measure when the customer receives the order?
Typically, OTD measures when an order ships from the manufacturer's facility. The metric that tracks delivery to the customer's location is often called On-Time-In-Full (OTIF).
How can we improve our OTD rate?
Improve OTD by creating realistic production schedules, managing bottlenecks, maintaining accurate inventory levels, and improving supplier communication.
Should OTD be measured by order line or by complete order?
Measuring by complete order is more common and customer-centric. A partial shipment is usually considered a late order because the customer did not receive everything they requested.
What is the difference between OTD and lead time?
Lead time is the total time from when an order is placed to when it is delivered. OTD is a performance metric that measures how often you meet your promised lead time.
On Time In Full
OTIFOn Time In Full (OTIF) is a supply chain metric that measures whether an order was delivered to the customer at the agreed-upon time and with the correct quantity.
Lead Time
Lead time is the total time elapsed from when a customer places an order to when they receive the finished product.
Key Performance Indicator
KPIA Key Performance Indicator (KPI) is a measurable value used to track progress toward a specific manufacturing goal.
Production Scheduling
Production scheduling is the process of assigning specific jobs to specific resources and work centers over a specific period of time.
Supply Chain Management
SCMSupply Chain Management (SCM) is the process of managing the flow of goods, data, and finances related to a product from procurement to final delivery.