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On Time Delivery KPI for sales?

Hi everyone

In your opinion, how recommended is to set the KPI OTD to the sales process?
I have seen this KPI in some organizations.

I think, would be better to measure the process more focused to increase sales, increase new customers,etc. instead to otd.
But in other way of thinking, I think also it could be useful because sales people always are pushing to production and other process, because
they compromise delivery dates and want to comply with that.
although, strictly sales limit is ..from receiving the purchase order and create the Work orders for production.
Production processes manage their own kpis.
What do you think is more suitable for Sales?

Thanks for your help

tony s

Information Seeker
In setting objectives and KPIs for the Sales Dept, you need to determine first "What do your organization (or interested parties) want/need from the Sales Dept"? Context is key in determining the appropriate objectives and KPIs for any department or organization. The reason why ISO 9001 clause 6.2.1 specifies "the quality objectives shall... take into account applicable requirements".
To me, something like on-time delivery is everyone's KPI. As you described, sales, production, quality, etc. all have a hand in it. It's a good company wide metric.
Thanks Golfman.
Yes, I know everyone participates in this KPI.
Considering OTD means: time elapsed since customer required the product until this is received.
In my opinion , this doesn´t have a direct relationship with the activities of sales process.
Sales process participates only at when PO is received until work order is sent to Production process, Production process, starts to count from the receiving of the work order until product is sent to Quality and so on...
It think could be better to set it as an quality objective, (to improve it) and under this objective, to define kpis
in other processes which could support this main objective.
What do other fellows do in this regard?
"Considering OTD means: time elapsed since customer required the product until this is received.
In my opinion , this doesn´t have a direct relationship with the activities of sales process."

Sales is the owner of a contract review process in which delivery is quoted so they do have direct impact on OTD. The root cause of late delivery is often outside of the Sales team's control but your corrective actions might be to increase controls in the Sales/Contract review, add a cross functional review of requirements before a date of delivery is decided, or better planning tools etc.

You don't have to have a goal for every department in a binary way. You determine your relevant functions. If on time delivery is part of your quality policy, and part of your customer's requirements, then it should be one of your goals where action is taken when the goal isn't met.
We have OTD as a KPI but the responsible party for measuring the data is the head of operations but its the management review (cross functional) team that determines actions. Also, our goal is 100%, so we never meet it and annually look at ways to get better at meeting it.

6.2.1 The organization shall establish quality objectives at relevant functions, levels and processes needed for the quality management system.
The quality objectives shall:
  • be consistent with the quality policy;
  • be measurable;
  • take into account applicable requirements;
  • be relevant to conformity of products and services and to enhancement of customer satisfaction;......
As long as sales makes commitments to on delivery time, on-time delivery (OTD) is a VERY appropriate KPI for sales. If they don't have to answer to their delivery commitments you will have a big scramble is production, a lot of missed deliveries, and many VERY unhappy customers.

Duel up OTD with Customer Satisfaction for a meaningful set of KPI for sales.
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