Are you delivering in full and on time?
Is your supply chain department working efficiently?
There’s a way to measure your supply chain efficiency and be sure about it.
That’s with the DIFOT rate.
In this post, we will discuss DIFOT(Delivery in full, on time) why it matters and how you can improve.
Let’s start this post by understanding what is DIFOT
What is DIFOT
DIFOT(delivery in full, on time) or OTIF(on-time and in-full), is basically transporter’s key performance indicator(KPI) that defines your supply chain efficiency by measuring the product, quantity, and delivery performance. It generally expressed in percentage(%).
DIFOT is dependent on the following factors –
- The quality of the product ordered
- In the full quantity ordered by the client
- At the place agreed by the customer
- On the time expected by the customer
DIFOT directly measures how successful your supply chain is at fulfilling these objectives. To achieve a high DIFOT rate, all the functions of the supply chain (among which orders taking, freight procurement, suppliers, warehouses, transport …) must work at their best level.
DIFOT looks at the delivery performance from the perspective of the client hence most businesses consider DIFOT better than other delivery performance indicators such as shipped-on-time (SOT) and on-time performance (OTP).
How to Calculate Difot rates
Requirements for the DIFOT measurement are :
- Number of deliveries
- Delivery date
- measure the date or the hour of delivery and archive it in the system
- maintain a record of the reasons why an order was not OTIF.
DIFOT(%) = Number of deliveries OTIF / (Total number of deliveries) X 100
OTIF deliveries are those that fulfill the following criteria
On-Time = (Delivery time) – (Confirmed delivery time)
Target result = 0
In this case, the shipper should be able to match a delivery time agreed with the clients, and there is no lower limit, meaning it is not a problem if the shipment is delivered very early and the result of subtraction is a positive value.
In Full = (Delivered amount) – (Confirmed amount)
Target result = 0
Here, the delivered amount should be exactly what is agreed with the customer.
Suppose, after calculation if your DIFOT rate is 86%; means out of 100 orders, 86 orders were reached to customers in full quantity and on expected time.
How to use difot
Once you calculated the DIFOT report you need to drill down through the data. There is always a pattern to DIFOT. A good rule of thumb is that one delivery issue to a customer is most likely to human error or genuine carrier failure but two delivery issues to the same customer is a systemic problem that can be fixed and prevented.
If you are a shipper you can use the DIFOT metric to measure your supply chain performance and use the results to promote your company’s excellent services or to improve your logistics department performance.
If you are a client or consignee you can measure the performance of your supplier and find out which supplier delivering you on time with the right quantity and quality of the product you ordered. Depending upon the performance you can take future decisions.
What affects your DIFOT Rates?
You might have noticed while placing an order online company gives you an estimated date of delivery once you purchased the product. When a company delivery you the product within the same specified amount of time, that is considered as DIFOT success.
It is necessary for customer retention to get the products your customers need, when they need them, in the quantity they ordered.
A poor DIFOT can be caused by a range of following issues –
- Less stock and manufacturer fault
- Human error can include miscounting, misreading or misplacing part of an order
- Receiver issues such as closing hours or refusals
- Genuine carrier failures
- Shipping route
- Incorrect assumptions in the established transit times
- Running an inefficient warehouse can be costly
Whatever it might be that is impacting your ability to DIFOT, effectively tracking supply chain and monitoring what might cause leakage can help get things back on track.
How to fix poor DIFOT?
You can manage complex spreadsheets to keep track of your supply chain activities but again it’s time-consuming and error-prone.
Based on the global supply chain survey I would suggest a data analytics solution is the best option to go for.
Because the survey found that using data analytics is helping business leaders DIFOT at 96% and above, which is 7% higher than the average.
Most organizations already know what their DIFOT percentage is, but the key is being able to easily pinpoint what the issues are when they occur, and why. Hence smart companies have begun investing in data analytics solutions to improve order fulfillment rates.
How GoComet’s shipment tracking solution changing the game?
Shipping routes and incorrect assumptions in the established transit times are the major factors that impact your DIFOT. And GoComet can help you to figure out the issue and you can fix it.
It’s an intuitive, user-friendly solution that simply displays the facts and allows you to chart and graph what’s happening across the business, share data points and trends.
As I mentioned earlier, there is always a pattern to DIFOT and GoComet keeps track of all your shipments history and actions. You just have to drill in to analyze the pattern and get the root causes for the delay in deliveries.
So that you can learn which route or shipping line causing you trouble. As a freight manager, you need to work on generated data to ensure the outcomes being are those you require.