Last Monday when I visited Michael, he said, “We have a big problem… We fared awfully bad in the customer satisfaction survey conducted by a third party. This is despite our OTIF being at 97%.”
And then he said, “Unfortunately, an investigation revealed that the OTIF calculated by our customers was between 30 to 44%.”
I remembered that whenever I asked about the reliability of Infraproducts’ supply, I was always given high 90s. I always had doubt because those numbers were achieved by very few highly disciplined organizations.
And whenever I asked for improving reliability of supply, often I would be fed with urgent initiatives on cost reduction, quality improvement, process stability, process development, continuous improvements etc. I knew that all these are important, but in a fiercely competitive environment, I felt that reliability of supply is becoming the key metric customers have started measuring organizations on.
A further investigation into the process of deriving OTIF revealed a mega difference in what Infraproducts and what the customers meant by OTIF.
Michael’s team calculated OTIF based on the last ‘mutually agreed’ delivery dates, while the customers had a detailed procedure for calculating the OTIF. Customers calculated OTIF based on ‘the first agreed’ due date, because it was on those promised dates, the orders were given to Michael’s team. Further, the definition of ‘Full’ in OTIF meant not only delivery of all quantities, but also right items as per invoice including spare parts, documentation and without any change in purchase order terms…to read more download the document from the following links
Also available on Slide Share
31 March 2014