One hundred percent OTIF. The perfect order, that’s the goal. Along with many other KPIs, a perfect fulfilment rate is ideal, but the reality is no system is completely and consistently free of issues. To hit better target numbers, what factors do we need to focus on to improve OTIF and get as close to the bullseye as possible?

What is a Good OTIF Metric?

As previously stated, an ideal OTIF report would be 100% successful compliance and performance across your customer base. In the real world of unpredictability and circumstance, 80% to 90% fulfilment rates constitute more realistic results.

OTIF KPI

In the simplest of terms, the key performance indicator (KPI) for an OTIF rating is expressed as a percentage measuring logistics or delivery performance within a supply chain. Specifically, it refers to the ratio of customer orders successfully shipped on or before the requested delivery date and at the correct quantities versus the total number of orders.

The Benefits of Improving OTIF

Beyond the obvious benefits to your customers, having a robust system to measure and track your OTIF results can cut down shipment returns, expedited deliveries, and order refusals.

Not only does this add to your bottom line and increase customer confidence, having access to more predictable stock levels helps avoid missed revenue opportunities due to lack of inventory on hand.

Ways to Improve OTIF

A good strategy towards improving OTIF results must focus on agility, resiliency and the ability to plan for contingency. One method of leveraging agility can be implemented through the use of systems that utilize machine learning technology and emerging artificial intelligence models.

While adopting new technologies may not happen overnight, the ability to diagnose issues early does allow you to react quickly and enact changes.

Along with implementing enhanced technologies, other ways of improving supply chain OTIF performance include:

1. Leverage Real-Time Data

Leveraging real–time data is essential for improving OTIF performance. Partnering with a logistics provider whose technology offers real–time updates on order tracking is a must. This allows you to know exactly what’s happening in-transit and proactively prevent late deliveries if any issues arise.

2. Utilize Logistics Data

Logistics data is a critical tool for understanding overall shipping performance. Segregating out key metrics such as pickup and drop-off accuracies can help you identify weak spots in your supply chain. if drop-off times are consistently late, you can drill down on the underlying cause of problem to help determine a solution.

3. Work with Logistics Experts

Work with a logistics partner who understands the intricacies of your market sector. Better 3PL companies will be up-to-date on the latest technologies and have reliable carrier networks. A logistics partner with a strong record of dependable performance and timely delivery goes a long way to improving your OTIF rate.

4. Know Your Customer Intimately

Knowing the specific requirements of your customer helps mitigate wasted time and effort. Every business has its own culture and way of operating – such as very specific requirements for delivery windows. Assuming every customer operates by the same standard is setting yourself up for failure.

5. Keep Production and Transportation Coordinated

Companies with misaligned production and transportation schedules will have a hard time coordinating with on-time deliveries. Systems must be put in place that keep production expectations in line with transportation deadlines.

6. Understand Must-Arrive-By-Date Scheduling

Buyers set due dates for product deliveries. Meeting the must-arrive-by-date (MABD) consistently is a critical component of delivery. Your buyer will determine a definitive due date for your product to arrive by at their distribution center.

It’s important to understand that while some receiving locations exercise open scheduling, others restrict appointment hours with little to no flexibility.

7. Communicate Clearly with Warehouses

Communicating clearly with your warehouse partners and production managers will help ensure product pick-and-pack is properly coordinated and ready to ship on time. One sure way to generate bad-will is to leave carriers waiting too long in customer pick up or needing to set new appointment times.

8. Optimize Network Configurations

Cutting down on transportation times means optimizing warehouse providers to work with key receiving locations. Organizing your network to better suit preferred customers can keep transportation between facilities more efficient.

9. Add Extra Lead Time

If at all possible, padding your shipping with an extra day or two for contingency can make the difference between a successful and late delivery – especially in seasonally affected areas.

10. Partner with Preferred Carriers

Partnering with preferred carriers with experience in your sector will give your organization the best chance of hitting a customer’s OTIF requirements. These carriers will be familiar more with the nuances of the type of shipping and have a better chance of meeting deadlines.

11. Consider Consolidation Opportunities

By using consolidation or pool distribution, you can improve on-time performance to specific receiving locations and cut costs. Opportunities that unify shipping functions create more a more nimble service and increase capabilities.

12. Renegotiate When it Makes Sense

There are many facets of a business relationship that can be renegotiated, especially when both parties benefit. Over time, it’s not uncommon for demand to ebb and flow, therefor it makes sense to maintain an open conversation based on mutual flexibility.

For example, a couple of key points that could help improve OTIF performance would be things such as requesting new due dates or adjusting order quantities to better suit overall operations. In all cases, it’s best to provide proof with data supported reasoning and clearly defined expectations.

What KPI Factors Affect OTIF?

Factors that affect OTIF can be as simple as weather and seasonality. Other factors include slow shipping speeds,  in-transit damage, outdated order tracking systems, manufacturing lead times, communication systems and of course human error itself.

Overall, there are a multitude of individual facets, factors and KPIs involved in the successful movement of products through the logistics industry:

Any of these factors can have an impact on OTIF scores and therefor, affect the overall shipping experience and by extension, the level of customer satisfaction.

OTIF vs OTD

While similar to OTIF, OTD (On-Time-Delivery) is less specific in that it does not take quantity into consideration. A successful OTD simply means a shipment was received on time whether in part or in whole. Additionally, OTDs typically allow more time for early delivery.

Can OTIF Be Standardized?

Considering the magnitude, scope and breadth of the supply chain industry, creating a catch-all standardized has practical limitations. Although, moving in a direction that increases successful OTIF outcomes is a step in the right direction.

If we use the CPG sector as an example, a McKinsey survey of twenty four major retailers and manufacturers reported, “92 percent agreed that an industry standard for OTIF would create value.”

Logistically speaking, the challenges facing any kind of standardized OTIF rely on a transportation industry that is constantly in a state of development. Therefor transportation analysis is more of a snapshot in time versus an absolute measurable metric.

Furthermore, organizations must define all the variables that go into shipping their products successfully through the supply chain from end-to-end. Meaning taking into consideration factors such as tariffs, regulatory adherences and political environments.

Considering the operational and logistical variables sector to sector and around the globe, standardized OTIF would also require a unification of fragmented systems. Though this may seem like an insurmountable task, there are solutions such as multi-party orchestration platforms that provide intelligence on variables in operations and logistics systems.

What Does OTIF Mean in Logistics?

In terms of logistics, on-time in-full (OTIF) is a supply chain metric used to measure performance. The goal is to consistently deliver “the perfect order” – meaning, the supplier delivers the product within expected delivery windows and in full quantities.

In short, OTIF metrics are not universal. In fact, the term OTIF itself refers to Walmart’s compliance program. Over time many other big-box stores have adopted or manifested similar programs.

As we’ve seen recently, post-COVID supply chain disruptions have been a major issue. Take for example the consumer goods sector, though we are seeing some stabilization, keeping store shelves full on a continuous basis is still a considerable challenge.

If you’ve designed your packaging to only look good to your customers, you may be in for a nasty surprise. What do you need to know to make absolutely sure your products can withstand the rigours of the journey through the supply chain?

The Importance of Packaging in the Supply Chain

There’s little doubt that retail markets, manufacturing methods, logistical flows and the environment in general are evolving. With this fluid landscape in mind, it’s important to anticipate how your product packaging fits with what’s just over the horizon.

Remember McDonald’s burgers served up in styrofoam containers? Nope, gone.

With respect to the gist of this article, that’s perhaps a little too far down the consumer FMCG supply chain. But the point is, if you don’t keep up with customer trends and expectations (as McDonalds was wise enough to do), you will become history sooner than expected.

Why is Proper Packaging so Important?

Imagine for a second, what condition do you think your smartphone would be in if it had left the factory without any packaging? Would it have wound up in your hand unscathed, in perfect working order without damage? Probably not.

Now imagine that same product perfectly packaged to presumably withstand any hardship on its journey to you, but has to experience severe heat, humidity or other conditions that were not anticipated.

The above examples may be extreme, but they illustrate how the success of each is dependant on the other. Both currents in the supply chain flow, the product deliverable and delivery system itself, have to be in harmony to keep the wheels of any economy turning smoothly.

Just as transportation systems must be efficient, packaging is just as important with respect to the total delivery process. Proper packaging serves as the protective barrier for goods from the time they leave the manufacturer, through transportation to distribution channels and finally landing in the hands of the customer.

Sustainable Packaging and Its Role in the Supply Chain

Making changes towards more sustainable packaging design, even minor ones, can make a world of difference, and a difference in the world. Small improvements in production, materials and operations decrease pressures on resources and reduce environmental impact.

Is there an end point where we say packaging is perfect? The answer lies in understanding that over time, change is inevitable. Therefore as a business owner, it’s imperative that you continually re-assess your packaging efforts, look for opportunities. Smart packaging means refining your processes to be more in line with consumer trends and current supply chain management conditions.

A few solutions that can increase packaging sustainability in the supply chain include:

• Minimal Packaging: Efficient and effective packaging is not only in line with lean manufacturing, it sheds a more favourable light on a company’s reputation as an environmentally conscious and authentic sustainability partner.
• Packaging Weight: By intelligently reducing the weight and mass of packing without sacrificing structural integrity, logistics-related costs can be reduced through decreased fuel consumption and maximized storage space.
• Single-Source Materials: While a see-through plastic window may help sell a pastry or pie, it does nothing in terms of sustainability when it’s hidden inside another opaque container. Wherever possible, alternatives for mixed-materials, especially in consumer packaged goods (CPG) should be considered.
• Dissolvability: Compostable, plant-based packaging continues to be a more favourable marketing alternative. From forks and spoons made of starch to protein-based edible flexible films, their value lies in their efficient ability to return to the earth.
• Re-ability: Reusable packaging in the supply chain along with multi-use containers is not only widely accepted, but continues to gain traction every day. Reusable, refillable, returnable items such as plastic containers are expected to enjoy a CAGR of 9.5% through to 2028.
• Waste Controls: Whether through efficient movements in physical handling and storage, or partnering with 3PL services that practice green logistics, controlling waste of any kind is an imperative throughout the supply chain.
• Legitimacy: Counterfeit products, especially in the e-commerce sector, dilute consumer confidence across the board. By offering a method of verification, such as QR codes on labels or tamper-proof packaging, provide customers with the security they feel is necessary to qualify a purchase.

Essential Packaging Requirements in the Global Supply Chain

If you package your products, you are by default a contributor to the betterment of the global supply chain. As part of a responsible supply chain management strategy, proper protective packaging helps ensure the shipping industry is not encumbered by excess losses and insurance claims due to substandard or inadequate packaging.

While every market segment has its own specific baselines for packaging requirements, all related systems must work together to ensure the delivery process runs smoothly from iteration to destination.

Regardless of the type of item, from a toothpick to a new refrigerator, there are fundamental packaging functions that must be considered:

• Protection: Product packaging must protect the goods from the rigours of shipping, handling and other external factors to make sure that products arrive in good condition.
• Storage: Since products can travel through multiple storage locations before they reach their final destination, packaging and associated materials must allow for convenient storage and meet storage requirements.
• Transportability: Better packaging design allows for more efficient handling, stowing and stacking capabilities. By maximizing available space, all aspects of the transportation process become more cost-effective.
• Tertiary Packaging: The extra layer of protective packaging that safeguards the secondary and primary packaging levels of the goods. Not only is there an organizational benefit through grouping products into a single container, using eco-friendly materials for this function is generally more favourable as we move towards global awareness and environmental responsibility.

Final Thoughts

There are many aspects to packaging that work with and within an evolving supply chain system. Major influences include the ability to draw from data-based feedback, making forward-thinking decisions based on solid information and managing the supply chain responsibly.

To successfully accomplish this year after year, we must be able to predict and control key resources such as product protection, specifications, delivery times, inventory levels, workforce stability and perhaps most importantly the safety of all who are part of the global supply chain network.

What Does Packaging Optimization Mean?

In simple terms, “packaging optimization” is a process that utilizes smart packaging. This refined method of packaging is designed to safely contain, protect and communicate the specific contents of your packaging as your products travel through the various handling processes within the supply chain.

The product’s journey starts with the manufacturer, then may go on to a warehouse or in-store fulfillment centre, and ultimately wind up being delivered at its final destination. This  last mile of delivery could be a consumer’s home, an office building, retailer or other end point.

At each step along the way, there are factors which determine in what condition your products will ultimately arrive. Optimizing your packaging for the rigours of your product’s journey can make all the difference in the world.

Start by Choosing Optimal Packaging Materials

The first step in choosing optimized packaging for your product is in fully understanding its vulnerabilities .This involves going the testing stage (if applicable), then determining the best packaging materials.

Once your product has gone through testing using established protocols for its shipping class, the next task is developing the the proper packaging to help protect the product as it navigates through all supply chain environments.

This packaging system is broken down into three levels:

1. Primary Packaging – The packaging directly in contact with the product itself and is often designed with the “unboxing” experience in mind. Other considerations are product protection and perhaps store display.
2. Secondary Packaging – Packaging that’s just outside of the primary packaging and typically used to create a stock-keeping unit or SKU. Also part of the unboxing experience, this protective layer also helps guard against moisture and humidity.
3. Tertiary Packaging – Referred to as transit or bulk packaging which often forms a group quantity of SKUs. This level of packaging is the final layer used to protect the products in transport, safely and securely, from point A to point B. For example, this could be from a manufacturer’s loading dock to the final point of sale.

How Much Packaging is Just Enough for the Environment and Supply Chain?

In order to save on costs, many products wind up being under-packaged. This results in avoidable damage that sends the product into reverse logistics. This also produces product waste along with associated fees and other costs.

Conversely, there are some products which are over-packaged using far more material than is necessary. This excess is not only wasteful in its own right, but has an impact on our environment. Not just in terms of landfill or limited recycling, but in transportation costs due to size and weight issues. These overages in turn lead to excess fuel and energy consumption, along with higher transportation fees throughout the supply chain.

The sweet spot in optimal packaging should be designed to fit the requirements of your supply chain with these key points in mind:

• The right type and thickness of packaging films or rigid plastics
• Effective thickness and properties of foam or protective packaging
• An appropriate strength and flute of corrugated board used
• An efficient use and amount of winds of stretch wrap
• An efficient use of packaging tape or adhesive in the right location

Optimize Package Design

Whether you’re designing a package from the ground up or updating an existing design, there is value in following best practises within your industry, along with taking cues from consumer feedback.

Some considerations may include using fewer materials or lowering packaging weight. For example, modern packaging materials may include a dissolvable bag-in-container for non-solid or semi-solid products such as cereals. Or a bio-degradable rigid container might offer the right benefits for transport and storage space for other products.

Now with the right packaging and materials selected, it’s on to actually designing and engineering the packaging. Keep in mind this can impact different sections of not only the supply chan, but you own general packaging operations:

• Manufacturing & Operations – Your package design should ideally work within your current manufacturing processes and automation equipment. Additionally, these optimized packaging requirements should enable your systems to run at their optimal speeds.
• Material Vendors – Is your current material vendor able to produce the package to your specifications, and are they in line with your packaging objectives? Upgrading design factors can affect material vendor capabilities, as well as your own manufacturing systems. Therefor, make sure your provider’s equipment capabilities, material competencies and visions for the future are up to the task.
• Supply Chain Costs – Unique or non-standard shapes can impact your transportation expenses. Your packaging is truly optimized when all systems and touch points are maximized – or minimized as in the case of wasted air space. Shipping air, unless it’s absolutely necessary and relevant to the product, is wasteful.

Optimize Product Counts for Better Cost & Efficiency

End-users and customers often dictate the order quantities and case counts – that is, with the exception of the number of hot dogs in a package with respect to the number of hot dog buns  – a mysterious mismatch. Regardless, this demand is true for not only consumer packaged goods (CPG) manufacturers, but B2B manufacturers as well.

Fitting more product on a pallet without compromising product safety can improve your overall cube or product shipping density. This is an important part of transportation optimization especially when you use less-than-truckload (LTL) freight extensively. Similarly, fitting more product on a retail shelf or within storage can also help reduce inventory and storage requirements.

What is the Right Amount of Packaging Protection?

The right level of packaging protection will ultimately mitigate or at least minimize damage during transit or stacking. Effective packaging protection designed for specific products can have a wide array of requirements. For example:

• Protective barriers for pharmaceuticals and food products to help extend and maintain shelf life. This industry-specific packaging protects against environmental damages and penetration from oxygen, moisture or other contaminants.
• Fragile products require additional shock protection. This helps keep products from suffering damage due to mishandling and impacts.

Standardize Your Product Package Designs

Consider standardizing package sizes and dimensions across multiple products. This lets you increase efficiencies by streamlining manufacturing, reducing system changeover times, and improving line utilization. The added benefit is less risk of wastage as excess packaging can be redirected to other products with minimal loss in time, effort and materials.

Build Sustainability in Your Supply Chain

Baking in energy-efficient production will not only help reduce stress on the environment, it can also help your bottom line. Choosing to use energy-efficient machines and forward-thinking packaging materials with lower manufacturing temperature requirements, can produce very real and tangible savings.

Incorporating sustainable practices, recyclable materials and reusable packaging helps keep your packaging agile, adaptive. and generates goodwill towards the public’s growing awareness that environmental problems indeed need to be addressed now more than ever.

Packaging can have different applications, dependent on the stage of distribution that the product is in; the product has to go from the producer to the retailer, and from the retailer to the consumer.

Through its long journey, a product might require specialized packaging, so that it gets to its destination in perfect condition. But what that destination is will determine which type of packaging it will need. Here, we will explore the difference between consumer and industrial packaging.

Before understanding the difference between consumer and industrial packaging, however, it is important to know what roles the packaging serves in the product’s journey from the manufacturer to the consumer. Here are some of the functions of packaging;

• Market the product
• Provide information about the product
• Protect the product against damage and unsanitary conditions
• Contain the product, especially liquids
• Simplify transportation

What is industrial packaging and consumer packaging?

So what is the difference between industrial packaging and consumer packaging? Industrial packaging is typically used to deliver goods from the manufacturer to the retailer.

There are instances when the industrial packaging is also the consumer packaging. Take for instance animal feeds that come in sacks. The sacks are loaded to trucks from the manufacturer directly to the retailer, and arrive the same way to the consumer.

Consumer packaging, on the other hand, is the packaging that the product gets to the consumer in. This packaging goes from the manufacturer to the retail outlet, and finally to the consumer.

For example, a package of cookies that leaves the manufacturer arrives at the retail store exactly as it will be sold to the consumer.

Another vital difference between consumer and industrial packaging is labeling; they have different labeling requirements, such as in declaration of quantity, responsibility, and identity.

What are the three levels of packaging?

There are three levels of packaging:

• Primary packaging: Wraps the product directly, which arrives to the consumer as is. The main purpose for primary packaging is to preserve and protect the product.
• Secondary packaging: Used in addition to, or on top of, the primary package. This level of packaging markets the product, and also gathers the products for easy handling and sales. It can also be used to group the product.
• Tertiary packaging: Typically used in the transportation of the products from the producer to the retailer; it is also used to define the sales unit that the manufacturer uses to sell to the consumer. For instance, a crate or corrugated carton containing a certain number of units of the product within.

What is the difference between CPG and FMCG?

Consumer packaged goods (CPG) and fast-moving consumer goods (FMCG) are often used interchangeably, but the two terms mean different things.

FMCG are those goods that are used on a daily basis in a household, like soap, detergent, deodorant, and shampoo. CPG are items used less frequently in the household, like canned foods, spices, etc.