Published: March 25, 2025 Updated: March 21, 2025
How OTD Improves Maintenance Management Success
Do you ever feel disappointed when a package arrives a day too late? Perhaps for a birthday or Christmas? While you experience frustration, you can get over the delay and move on.
How about if purchase orders don't arrive when expected at your workplace? Clients contract for your products or services. You strive to provide on-time delivery. Shouldn't you expect the same from the vendors who supply you?
What is the risk here? Well, let's put this in the perspective of asset management. Equipment, machines, and vehicles all contribute to your production. Assets need maintenance. Maintenance requires parts and supplies.
See how the logical flow works? Now, throw a glitch in this process. The vendor from whom you ordered those parts delays a shipment. That means you can't work on those assets.
How will that affect your product completion? How will it affect your delivery time? In this article, we'll discuss the following:
- Various aspects of on-time delivery (OTD).
- Tips to minimize delays.
- How a computerized maintenance management system can assist in measuring OTD.
How to Measure On-Time Delivery Performance
First, let's discuss a couple of calculations of OTD.
Percentage of On-Time Deliveries: The most basic and common method. It calculates the ratio of deliveries that arrived on time or within a specific grace period (e.g., 5 days before or after the promised date) compared to the total number of deliveries.
Looking at the formula we see:
OTD Rate = (Number of On-Time Deliveries / Total Number of Deliveries) x 100%
For example, if a company had 100 deliveries this month and 5 arrived late, their OTD rate equals 95%.
Perfect On-Time Delivery: This method takes a stricter approach. It only considers deliveries that arrive exactly on the promised date as on time. This emphasizes the importance of meeting the exact commitment made to the customer.
Perfect OTD Rate = (Number of Deliveries on Promised Date / Total Number of Deliveries) x 100%
Using the same example from before, if only 90 deliveries arrived on the exact promised date, the Perfect OTD rate equals 90%.
The Four Types of OTD in Business Operations
Let's use these measurements with four types of On-Time examples.
On-Time Product Delivery and Its Impact
Definition: Delivery of a finished product to the customer by the agreed-upon date.
Measurement: Percentage of On-Time Deliveries: Calculated as the number of products delivered on time or within a grace period (e.g., +/- 3 days) divided by the total number of products scheduled for delivery.
Perfect On-Time Delivery: Measures the percentage of products delivered on the exact promised date.
Example: A furniture manufacturer promises delivery within 4 weeks of order confirmation. If 90 out of 100 products arrive within that timeframe, the OTD rate equals 90%. If only 85 products arrive on the exact promised date, the Perfect OTD rate drops to 85%.
Service Completion and OTD Metrics
Definition: Completion of a specific service for a customer within the agreed-upon timeframe.
Measurement: Percentage of On-Time Service Completion: Calculated as the number of services completed on time or within a grace period divided by the total number of services scheduled.
First Time Fix Rate: Measures the percentage of services completed correctly without requiring additional interventions or rework.
Example: A technician promises to repair a computer within 24 hours. If he completes 80% of repairs within that timeframe, the OTD rate stands at 80%. If you have 95% of repairs fixed correctly on the first attempt, the First Time Fix Rate increases to 95%.
Project Completion and OTD Measurement
Definition: Completion of all project tasks and deliverables within the established timeline.
Measurement: Project Completion Rate on Time: Calculated as the percentage of projects completed on or before the deadline, considering any approved extensions.
Earned Value Management (EVM): Analyzes the project's progress against its budget and schedule. It identifies potential delays or cost overruns.
Example: A construction project has a planned completion date of 6 months. If workers finish 90% of the planned tasks by the deadline, the Project Completion Rate on Time equals 90%. EVM can monitor if the project stays on track to finish within budget and schedule.
Shipment OTD and Supply Chain Efficiency
Definition: Delivery of goods to a designated location by the agreed-upon date and time.
Measurement: Percentage of On-Time Shipments: Calculated as the number of shipments delivered on time or within a grace period divided by the total number of shipments planned.
Carrier On-Time Performance (OTP): Measures the carrier's adherence to agreed-upon delivery schedules.
Example: A logistics company promises next-day delivery for a package. If the vendor delivers 98% of packages the following day, the OTD rate equals 98%. Tracking the carrier's OTP can indicate their overall reliability in meeting delivery timelines.
Discover how streamlined maintenance processes can elevate production. Learn more.
How to Improve OTD and Maintenance Management Efficiency
Implement Clear Communication and Expectations:
Clearly define on-time delivery (OTD) expectations in contracts and purchase orders.
Specify delivery windows, tolerance levels for delays, and consequences for missed deadlines.
Encourage open communication with vendors about potential delays and provide early notification if the need for adjustments exists.
Data-Driven Vendor Selection and Performance Monitoring:
Evaluate vendors based on past OTD performance and track their current delivery metrics.
Analyze reasons for past delays and prioritize vendors with a consistent track record of on-time deliveries.
Consider implementing a vendor scorecard system to objectively track and compare performance.
Build Collaborative Relationships:
Foster strong relationships with key vendors through regular communication and collaboration.
Share your production and inventory needs openly to allow vendors to plan accordingly.
Work together to identify and address potential bottlenecks in the supply chain that might impact delivery timelines.
Leverage Technology for Visibility and Tracking:
Utilize technology solutions that provide real-time shipment tracking and visibility.
Integrate vendor systems with your own for seamless data exchange and automated notifications.
Implement tools like transportation management systems (TMS) to optimize routing and track deliveries in real time. Read on for how a CMMS can benefit.
Incentivize On-Time Performance:
Consider offering incentives for vendors who consistently meet or exceed OTD expectations.
This could include early payment discounts, volume discounts, or extended contract terms.
Such incentives can motivate vendors to prioritize your deliveries and maintain high performance.
How CMMS Enhances OTD and Maintenance Management
Of course, many companies benefit from CMMS software. It provides organization to assets, inventory, preventive maintenance, and work orders.
However, you can utilize more than just maintenance-related features. Quality systems offer purchasing and receiving options. That way, system users can track the needed inventory I discussed at the beginning.
How can a CMMS help OTD?
Track Vendor Performance:
CMMS allows the recording of purchase orders (POs) for vendor parts and materials.
Track the actual delivery date and time compared to the promised date in the PO.
You use this data to calculate on-time delivery (OTD) rates for individual vendors over time.
Identify Bottlenecks and Trends:
Analyze historical OTD data within the CMMS to identify vendors with consistently low performance.
Drill down into specific parts or materials with frequent delays to pinpoint potential supply chain bottlenecks.
Identify trends like seasonal fluctuations or specific days of the week with higher delays.
Set Performance Benchmarks and Goals:
Establish clear OTD performance expectations for each vendor based on industry standards or internal targets.
Set measurable goals for improvement within the CMMS and track progress over time.
This allows for proactive intervention and communication with underperforming vendors.
Generate Reports and Dashboards:
Utilize CMMS reporting features to generate customized reports and dashboards focusing on vendor OTD performance.
Visualize trends and identify areas for improvement through charts, graphs, and other data representations.
Share these reports with relevant stakeholders for informed decision-making.
Automate Communication and Alerts:
Configure the CMMS to automatically trigger alerts when vendor deliveries fall outside the designated timeframe.
This allows for immediate communication with the vendor to understand the cause of the delay and take corrective action.
Automated alerts ensure timely responses and minimize the impact on production schedules.
Maximize On-Time Delivery with the Right CMMS Solution
On-time delivery helps a company's reputation and customer loyalty. How many times did you go somewhere else when one of your household shipments arrived late?
You expect positive results from your vendors for your workplace. Everybody benefits when OTD stays high. Sure, you have to factor in the unexpected and have a contingency plan. You might have extra stock on hand for those just-in-case scenarios.
Using a CMMS to track OTD gives you better oversight over purchasing. The CMMS that performs the best? MAPCON. With over forty years of development, MAPCON delivers. On time. It meets and exceeds your expectations.
Mapcon / 800-922-4336
MAPCON CMMS software empowers you to plan and execute PM tasks flawlessly, thanks to its wealth of features and customizable options. Want to see it for yourself? Click the button below to get your FREE 30-day trial of MAPCON!
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