If you’re involved in the manufacturing or distribution business, you’ll know how important it is to deliver to your customers on time. When a product lands into a customer’s hands on time, this leads to greater customer satisfaction. On the other hand, if a product is late, a customer can become disgruntled and brand loyalty can diminish. When it comes to late delivery, a fundamental reason why products are late is because of poor supplier performance. This means there’s a problem with a supplier and it has a ripple effect on your supply chain. At the end of the supply chain, your customer is incurring the repercussions of delays and out of stock items.
Delivery in full on time (DIFOT) is a vital metric when it comes to analysing your supply chain. Let’s see how this can help improve operations in your business.
What is DIFOT?
DIFOT is a measurement of how reliable the delivery schedule was when shipping a product, taking into account the number of orders that were delivered on time, with the right amount of the product, and that it was actually the product that the customer ordered. Usually, it looks at the expected delivery day, but it can look at the specific time. This helps you see if deliveries made it if there were promised by a certain time. It plays a key role in measuring the performance of a supply chain, analysing logistics and delivery performance.
DIFOT (%) = (Number of deliveries made on time and in full ÷ Number of total deliveries) x 100
When you want to analyse how well your inventory stock got sent out and delivered, you look at your DIFOT which is generally stated as a percentage. Once your inventory stock has been packed up for delivery, it will have a tracking code that can monitor it through several stages of delivery. If you have a DIFOT score of 82%, this means that 82 out of every 100 deliveries of your inventory stock made it to the customer on time and in full. The higher the score, the better your DIFOT rating.
DIFOT can teach your business about suppliers
Once you’ve started measuring your DIFOT rate, you can also apply this to analyse the performance of your suppliers. This allows you to have a better understanding of your suppliers and which ones are causing challenges for your supply chain. It easily highlights which suppliers are consistently late with their stock. It can also show you which suppliers are delivering the order on time, but not in the amount that you ordered.
DIFOT can support decision making in your business. Look at the data to see which suppliers have performed well over the course of the year. When it comes time to renew supplier contracts, you’ll have solid information to support which suppliers you’ll sign again.
You can look closely into the data to discover when DIFOT occurs and when it doesn’t. This means you can see what specific products are hindering you from delivering in full and on time. If there is a specific product, it may be worth investigating before you chose to use them again in the future.
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.