On-Time Delivery

On-time delivery is the metric the customer keeps. Every other quality and flow metric in the shop is internal. OTD is the one your purchasing contact reports up the chain on a quarterly basis. It is also the one most likely to be defined dishonestly inside the shop. A 96 percent number generated by counting ship date against promised date can sit alongside a 78 percent number generated the way the customer sees it, and both are accurate to their definitions. The conversation worth having is which one is true.

"The customer keeps their own scorecard. Your version is for you."

How on-time delivery works

The calculation is simple in form and contentious in practice: orders delivered on time divided by total orders in the period, expressed as a percentage. The contention is in every word of that sentence.

The definitions that matter

A real OTD definition pins down each of these before the first measurement:

• On time against what date. The customer's originally requested date is the strict version. The mutually agreed promise date is the operational version. Both are defensible; you cannot use the second one and claim the first.
• By shipment or by line. A single order with twelve line items where one ships late is one missed line or one missed order, depending on the rule. Customers usually count by line.
• Ship date or delivery date. Ship date is easier to measure and softer. Delivery date is what the customer experiences. A two-day transit gap can swing the number by several points.
• Window or strict. Some customers accept a delivery window of plus or minus one day. Others want the date exactly. The rule should match the customer's expectation, not the shop's preference.

When the customer's scorecard and the shop's internal report disagree, the customer is right by definition. Aligning the internal definition with what the customer measures is the first improvement most shops make to OTD without changing anything else.

Where on-time delivery fits on the shop floor

Imagine a 50-person fab shop running stainless steel components for two food-equipment OEMs. The shop reports 94 percent OTD internally. The bigger customer just sent a quarterly review showing the shop at 81 percent on their scorecard. The owner is upset; the data feels wrong.

The reconciliation walks through the definition gap. The shop counts ship date against the date the shop's order desk promised. The customer counts delivery date against the date the customer originally requested when they placed the order. Two days of transit and an average four-day push of the promise date account for almost all of the gap. The customer is not wrong. The shop's internal number was measuring the wrong thing.

The fix is structural. The order desk starts logging both the requested date and the promised date on every order. OTD gets reported against both. The shop now sees what the customer sees, which exposes a pattern: a single bottleneck operation is responsible for almost every late commitment, and the order desk has been quietly padding lead times around it. Fixing the bottleneck moves OTD against requested date from 81 to 92 over two quarters. The customer notices first. Not the dashboard.

Common mistakes with on-time delivery

• Counting ship date instead of delivery date. Ship date is easier and looks better. Delivery is what the customer feels.
• Counting partials as on-time. A nine-of-ten line shipment is not nine-tenths on time. The customer placed one order.
• Averaging across customers. A flattering shop-wide number can hide a punishing miss rate at the customer that matters most.
• Padding the promise. Quoting longer lead times to make the date easy to hit looks fine on the scorecard until a competitor quotes a shorter lead time the customer prefers.
• Logging misses without root causes. Counting the misses is bookkeeping. Identifying the recurring reasons is the actual improvement work.

On-time delivery and related Lean tools

On-time delivery is the customer-facing twin of schedule adherence, which measures whether the shop hit its own internal plan. It depends directly on stable lead time, because OTD is impossible to honor reliably when the time from order to ship swings unpredictably. In high-mix environments, build-to-schedule is the upstream metric that determines whether OTD is achievable in the first place. OTD belongs on the short list of lean KPIs every shop watches weekly.