Enhancing Distribution Efficiency Through OTIF Performance Evaluation

Abstract

Today’s market with more frequent but smaller deliveries complicates the realization of logistics processes and activities. Customers expect products within 24 h or 48 h. This poses a logistics challenge for companies in fulfilling the expected time window. In these situations, companies can either perform self-distribution or they can outsource it. When outsourcing, companies must define key performance indicators (KPIs) to measure the efficiency of the distribution process. One such KPI is On-Time In-Full (OTIF). OTIF fulfillment is increasingly becoming a fundamental requirement not only in distribution but also throughout the entire supply chain. Two essential prerequisites for successful outsourcing collaboration are ensuring that orders are delivered on time and in full. A review of the existing literature revealed that no studies simultaneously address this complex issue. This was exactly the main motive for developing a model that simultaneously takes into account the utilization of logistics resources on one hand, and OTIF on the other when calculating the efficiency. The model developed in this paper was tested on the data of a company operating in the Serbian market. The results showed that seven of the company’s warehouses are inefficient. A two-stage matrix analysis with the three most important indicators (operational efficiency, on-time delivery, and in-full delivery) was performed based on the obtained results. Other than the obvious scientific contributions, the proposed model can help companies increase their resource utilization efficiency as well as OTIF fulfillment.