Every successful business manager knows the importance of tracking metrics and KPIs like sales, expenditure, cash flow and sales patterns. In the same way, business owners should be tracking the extent to which every order is fulfilled accurately and on time. Failing to do so can have dire consequences for customer satisfaction and the success of the company overall.
In this article, we explain a simple method for keeping track of this, called Delivery in Full, On Time (DIFOT). DIFOT is a simple measure that business owners can use to ensure they’re keeping on track of order fulfilment processes and to identify areas for improvement.
What is DIFOT?
DIFOT is a measure used to track the number of orders that your business has delivered on time, with the right quantity of the correct products, and on the day that the customer required them.
For example, if your company delivered 50 orders and 42 were delivered in full, by the required time on the specified day, your DIFOT Key Performance Indicator is 84%. This measure tells you that the rate at which orders are fulfilled on time and accurately is not ideal and there could be room for improvement.
Knowing your DIFOT measure is important because, without it, it would be difficult to ascertain the extent to which your supply chain is processing orders adequately. Order fulfilment is key to customer satisfaction and the overall success of the business, so you’ll want to be keeping track of your DIFOT measure regularly and adjusting your supply chain as needed.
The relationship between inventory management and DIFOT
One key way that your DIFOT measure may be disrupted is through poor inventory management. This can occur when, for example, the business runs out of stock in a particular item, and this isn’t adequately addressed. In this circumstance, a customer’s order may not be fulfilled at all due to the lack of stock, or it may be extremely delayed while more inventory is ordered. This contributes to a lower DIFOT score and must be addressed to improve the order fulfilment rate.
In a similar way, poor management of perishable inventory such as food or cosmetics can also contribute to a lower DIFOT rating. If a customer orders a perishable item but the supply chain process is too time-consuming or error-prone, you risk delivering unusable goods. Business managers need to have regular oversight of inventory to ensure this doesn’t happen.
Invest in inventory software
An easy way to avoid the situations described above is to invest in quality inventory management software and use barcode scanning technologies and barcodes. These products will help you to minimise errors and time wastage when tracking and counting stock, and will also help you to review sales history and predict future sales trends.
By doing so, you’ll be better placed to ensure your inventory aligns adequately with what is in demand, and as such, you can avoid unfulfilled or delayed order fulfilment. This will encourage a higher DIFOT score, and keep your customers satisfied. Regularly check your DIFOT measure and adjusting your processes as required to make the necessary improvements.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.