📦 Do you really know how to measure your delivery performance? (OTD)

Sep 16, 2025

88% sounds good… but what exactly does it measure? A vague OTD can create the illusion of performance — and hide costly weak signals.

👉 Your OTD is at 88%? Great…

But 88% of what, exactly? And more importantly… at what cost?

OTD (On-Time Delivery) is one of the most widely used indicators in supply chain — and to assess overall company performance.

It seems simple at first glance, but it’s full of subtleties… and traps.

A poorly defined OTD can give a flattering — but false — picture of your performance.

Worse, it can hide weak signals that point to a breakdown in customer trust.

So, what exactly is your OTD really measuring?

1️⃣ A simple definition… on the surface

OTD measures, over a given period, the % of deliveries made on the agreed date (and time), compared to the total (orders/lines/quantities).

Calculation basis (to be chosen and documented):

Delivered quantities, or
Delivered order lines

Two main variants exist:

OTD to Request: performance vs. the customer’s requested date
OTD to Commit: performance vs. the promised date (communicated and accepted, often via Order Acknowledgement – OA)

👉 Key strategic question: which one do you use internally? Which one do you share with the customer?

💡 Note: Some customers request dates outside your standard cycle. It may seem helpful to accept them… but beware: it can distort your OTD and penalize you later.

2️⃣ Raw vs. negotiated: a telling gap

Very few companies clearly measure and distinguish:

Raw OTD: based on the original requested date (within the standard cycle)
Negotiated OTD: based on renegotiated dates (before or after shipment, without erasing the original date)

⚠️ If the gap grows (e.g. 88% negotiated shown internally vs. 70% raw), everyone believes “it’s fine”… until the day the customer stops collaborating. Then the trust loss is brutal.

💡 Real-world example: A manufacturer proudly showed 92% negotiated OTD. The raw rate was only 63%. A key client dropped them from the supplier panel overnight.

3️⃣ Parameters that change everything

A credible OTD must include and document its rules of measurement:

Delivery windows: ⚠️ delivering early ≠ delivering on time (e.g. window -3; 0 = delivery between D-3 and D0 only, not after)
Incoterms: the measurement point depends on the transfer of ownership (EXW = ready for pickup, DDP = received by client)
Population: lines, quantities, or orders? → This can significantly change the result

👉 These parameters must be clear, shared, adapted to each customer, and understood by the teams. Too often, no one knows whether the OTD shown refers to a shipment, a reception, or just a loading dock release.

4️⃣ The bad practices that “save” OTD

Observed (and risky or unacceptable) practices:

✍️ Rewriting the OA with a new date (erasing the history)
📆 Resetting the “order date” to match the new promise
📦 Marking a partial delivery as “closed”
⚠️ Shipping doubtful parts just to hit the deadline, then recalling them
🫸 Prioritizing not-yet-late lines instead of fixing the backlog — just to “save” the KPI

Result: an OTD that looks fine… while real performance degrades.

Shocked by some of these practices? Good. But yes — they do exist.

5️⃣ The hidden costs of an “optimized” OTD

Artificially maintaining a high OTD can get very expensive:

🚕 Express couriers / taxis, “premium” fees → margin destruction
✈️ Urgent air freight → OTD “saved”, finances wrecked
🔧 Shipping doubtful parts, then recalling → rework, customer service, damaged image
📅 Pushing production at month-end to hit revenue goals → overtime, chaos, and team burnout

👉 A credible OTD must be read in parallel with your service cost.

6️⃣ The consequences of a vague OTD

Discrepancies in client/supplier calculations → conflicts, penalties
Confused teams → wrong decisions
Growing raw vs. negotiated gap → loss of trust

7️⃣ How to make the measurement more reliable

✅ Don’t overwrite original data (requested, promised, actual dates) — if your ERP allows it

✅ Track raw and negotiated OTD — and analyze the gap

✅ Document calculation rules (window, incoterm, population)

✅ Link OTD to service cost (freight, rework, urgencies)

✅ Cross-analyze OTD with other indicators (delay depth, quality, supplier reliability…)

💡 Example: Delivering 0% on time with only 2 days max delay may be better perceived than 90% on time with 35-day delays on worst lines. It’s all about clarity and trust.

8️⃣ Pareto & KPI tree: your allies

OTD alone says nothing. Linked to its root causes, it becomes actionable:

Pareto of delays: 20% of causes = 80% of delays
KPI tree: supplier quality → material availability → production plan reliability → client lead time

👉 Example: A drop in your SOTD (Supplier OTD) today will hit your client OTD in a few weeks.