Hi guys,
Short question: to calculate OTD you have early, late or overdue delivery. For my "critical" suppliers I have about 48% with early delivery and 38% with Late delivery (the remaining is a combinatin of early/late, etc). If for LATE delivery there are a lot of reasons (shortage of raw material, overproduction, etc) for early delivery I can see only one: poor communication between buyer-supplier. The question is: 48% is not too much? How much this level should be? (20% early and 80% late ?).

Hi guys,
Short question: to calculate OTD you have early, late or overdue delivery. For my "critical" suppliers I have about 48% with early delivery and 38% with Late delivery (the remaining is a combinatin of early/late, etc). If for LATE delivery there are a lot of reasons (shortage of raw material, overproduction, etc) for early delivery I can see only one: poor communication between buyer-supplier. The question is: 48% is not too much? How much this level should be? (20% early and 80% late ?).

Hi Paul,

There is no absolute answer to this question. What is important is what impact does an early or late delivery have on your business and what does the contract state with your suppliers?

Some businesses operate on a just in time basis with received goods going straight to a production line. In this case it is critical that suppliers hit dedicated delivery slots and should be monitored accordingly.

Other businesses take goods received into stock and the impact of an early or late delivery may be less.

Look at this as a process and set the relevant tolerances to keep your business running smoothly. Ensure that suppliers understand the importance of meeting your requirements and make sure that delivery times are clearly communicated through purchase orders, schedules, etc. You will then be in a position to monitor supplier delivery performance effectively and take action against suppliers who persistently fail to meet those targets.

Thanks for your input. The point is: nowdays majority of suppliers have shifted toward JIT/Lean /Six Sigma, etc and have demanded broader process control from their suppliers, early shipments must be less acceptable, so is a "natural" decreasing of this ration....

Early shipments can be just as bad as late shipments in terms of storage problems, shelf life, early request for payment, etc.

Some organisations have penalty clauses built into contracts to cover late delivery and the impact that it can have in terms of line stoppages.

Delivery is an important aspect of supplier development and good performance will only be achieved if requirements are clearly communicated and agreed.

Hi guys,
Short question: to calculate OTD you have early, late or overdue delivery. For my "critical" suppliers I have about 48% with early delivery and 38% with Late delivery (the remaining is a combinatin of early/late, etc). If for LATE delivery there are a lot of reasons (shortage of raw material, overproduction, etc) for early delivery I can see only one: poor communication between buyer-supplier. The question is: 48% is not too much? How much this level should be? (20% early and 80% late ?).

I would investigate the "early delivery" problem and determine 1) if the metric is set up correctly 2) is the data reliable.

Early delivery reaons: supplier ships and wants to get paid early or supplier has a systems problem.

Yes, I know that can be a lot of reasons for early delivery, including to get paid early or to hit certains goals for a specific date, etc... My problem was the percentace: 48% versus 38% and the first tought was that I did something wrong. I checked the data and everything was okay... I am happy because early delivery can be easier controled than late ones.
Thanks,
Paul:notme:

Yes, I know that can be a lot of reasons for early delivery, including to get paid early or to hit certains goals for a specific date, etc... My problem was the percentace: 48% versus 38% and the first tought was that I did something wrong. I checked the data and everything was okay... I am happy because early delivery can be easier controled than late ones.
Thanks,
Paul:notme:

The easiest way to control early deliveries is to refuse the shipments. In order to do it, you need to specify what constitutes "early" in the contract, and what will happen when shipments arrive early.