Most of the organizations have been measuring many KPI's related to delivery performance to the customers. Out of many measures, commonly used measures are Delivery actualization % and Ontime delivery (OTD) %.
Even though those measures are meant for delivery performance assessment, there is slight difference in the purpose and desirable behavior expected from those measures. In reality, both measures often interchangeably used and sometimes confused.
Given below some clarifications on both the measures (KPI's) and its purpose.
Delivery Actualization %:
This measure is calculated as follows
Delivery Actualization % = Quantity delivered / Quantity committed to the customer
for example,
the customer asked for 1000 pieces/month, and as an organization, you accepted to deliver 1000 pieces/month and if you delivered only 800 pieces/month, then
Delivery Actualization % would be 800/ 1000 = 80 %
Likewise, for each customer, you can calculate and finally arrive at your average delivery actualization.
This measure will indicate your performance towards meeting the delivering commitment in terms of quantity.
Pl, note that this measure is not concerned about the TIMELINE.
This measure indicates your organizational INTERNAL CAPABILITY towards delivery commitment.
On-time Delivery (OTD) %:
This measure is calculated as follows for each customer
On-Time Delivery % = No of components delivered full qty ON TIME / Total no of components
For example, a specific customer has 30 components that must be delivered in full qty as per the timeline committed either as per PO or by 1-1 mutual agreement.
Out of 30 components, you might have met 25 parts delivered on the EXACT DATE in full quantity as committed and remaining parts, you might have missed out on the DELIVERY TIME COMMITMENT.
then , OTD % will be 25/ 30 =83 %
This measure indicates your performance towards meeting customer's requirements on time.
Pl note that in the above example, you might have delivered all the quantity by the month-end and might have achieved 100 % delivery actualization. But you missed the timeline (OTD) target.
from the customer point of view, your timeline commitment is also critical even though you met quantity commitments at the end of the month.
To sum up,
OTD is important from the customer perspective on the timeline
Delivery actualization is important from internal capability and loss of sales perspective.
However, as a business head, you must be sensitive to both measures of delivery even though the intention of each measure is different.
Even though those measures are meant for delivery performance assessment, there is slight difference in the purpose and desirable behavior expected from those measures. In reality, both measures often interchangeably used and sometimes confused.
Given below some clarifications on both the measures (KPI's) and its purpose.
Delivery Actualization %:
This measure is calculated as follows
Delivery Actualization % = Quantity delivered / Quantity committed to the customer
for example,
the customer asked for 1000 pieces/month, and as an organization, you accepted to deliver 1000 pieces/month and if you delivered only 800 pieces/month, then
Delivery Actualization % would be 800/ 1000 = 80 %
Likewise, for each customer, you can calculate and finally arrive at your average delivery actualization.
This measure will indicate your performance towards meeting the delivering commitment in terms of quantity.
Pl, note that this measure is not concerned about the TIMELINE.
This measure indicates your organizational INTERNAL CAPABILITY towards delivery commitment.
On-time Delivery (OTD) %:
This measure is calculated as follows for each customer
On-Time Delivery % = No of components delivered full qty ON TIME / Total no of components
For example, a specific customer has 30 components that must be delivered in full qty as per the timeline committed either as per PO or by 1-1 mutual agreement.
Out of 30 components, you might have met 25 parts delivered on the EXACT DATE in full quantity as committed and remaining parts, you might have missed out on the DELIVERY TIME COMMITMENT.
then , OTD % will be 25/ 30 =83 %
This measure indicates your performance towards meeting customer's requirements on time.
Pl note that in the above example, you might have delivered all the quantity by the month-end and might have achieved 100 % delivery actualization. But you missed the timeline (OTD) target.
from the customer point of view, your timeline commitment is also critical even though you met quantity commitments at the end of the month.
To sum up,
OTD is important from the customer perspective on the timeline
Delivery actualization is important from internal capability and loss of sales perspective.
However, as a business head, you must be sensitive to both measures of delivery even though the intention of each measure is different.
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