The True Cost of OTIF Failure with Andrew Lynch
Andrew Lynch and Joe Lynch discuss the true cost of OTIF failure. OTIF means on time and in full, where the customer receives the completed order when they wanted it and, in the quantity, ordered. OTIF is a key supply chain metric. It is generally calculated as a percentage of total deliveries that were complete and on time.
About Andrew Lynch
Andrew Lynch is President and co-founder of Zipline Logistics, an award-winning North American 3PL that specializes exclusively in the transportation of retail consumer goods. He works alongside clients ranging from some of the largest food and beverage businesses in the world to the brightest up-and-coming CPG brands in North America. Lynch and his team leverage data intelligence and strong industry relationships to help clients uncover transportation savings, build scalable supply chain strategies, and ace retailer compliance programs. Starting his career in carrier procurement and management within a Fortune 100 logistics company, Lynch has held positions of responsibility in all areas of third-party logistics.
About Zipline Logistics
Zipline Logistics, founded in 2007, is a digitally enabled transportation partner specializing exclusively in serving the food, beverage, and consumer product manufacturers. Managing hundreds of thousands of shipments, Zipline Logistics proudly serves clients ranging from some of the largest retail organizations in the world to the brightest up-and-coming food and beverage brands in North America. The 3PL’s capacity procurement team utilizes a proprietary qualification process to identify and contract the highest quality providers to operate within its network. This selectively procured carrier group is leveraged, along with Zipline Logistics’ proprietary data analytics software, a retail-trained operations staff, and service-first organizational culture, to deliver the absolute best client experience in transportation. Zipline Logistics was selected as an Inc. 5000 fastest growing company for 8 years, is a 9-time winner of the Columbus Business First Fast 50 Award and is consistently recognized as a Top 100 3PL by trusted outlets such as Food Logistics Magazine and Transport Topics.
Key Takeaways: The True Cost of OTIF Failure
- OTIF is the acronym for on time and in full, which is supply chain measurement that is usually expressed as a percentage.
- In recent years, many large retailers began using OTIF to measure their supplier’s performance. Typically, the retailer will set a minimum service level for OTIF deliveries. The minimum OTIF percentage varies by industry.
- Suppliers who do not meet the minimum OTIF service level are often fined by the retailer.
- In the podcast interview, Andrew Lynch explained that the fines are only part of the total cost of OTIF failure. The true cost of OTIF failure would also include the following costs:
- Lost sales. If the product isn’t on the shelf, it can’t be sold.
- Relationships with the retailer are hurt. Fail the customer too many times and the business will be lost.
- Lost customers. Disappoint the customer enough times and they may stop buying your product.
- Involuntary sampling. When customers can’t find your product, they many be begin sampling your competition’s product and you could potentially lose that customer.
- Operational problems. Too many OTIF failures may point to larger supply chain issues in the organization that are far more costly than OTIF failure.
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