OTIF – the Doorway to Trust
The very best companies realised early on that there is one key driver to success – building the market’s trust in you and your product.
Your customer needs to know with a high degree of certainty that buying from you will be a positive experience. They need confidence in the answers to their typical questions:
- Will it do what it’s supposed to do?
- Will it be the same as the last one I bought?
- Will I get it on time?
- Will it be as economical as it claims?
- Is it really environmentally friendly, sustainable?
- Will further purchases be of the same quality and at the same price?
- If there is a problem, is there someone to talk to?
- Will there be a refund if it doesn’t work?
They will weigh up the seeming advantage of the purchase vs the risk of losing the money spent on an unacceptable or late delivery product. They will want to know if they can really believe your marketing hype and your sales pitch.
The best companies focus on building trust in all respects. They focus on satisfying and hopefully exceeding expectations concerning product performance, quality, cost and, just as importantly, delivery on time and in good order.
The world leading producers and marketers use OTIF (On Time, In Full) as a measure of customer delivery effectiveness, in their drive to ensure customer satisfaction. They focus on driving up their OTIF performance towards 100% (on time, in good order with no errors – every time!) – as the key and overriding driver of customer satisfaction and trust.
How to apply the OTIF focus
Start by honestly and transparently measuring your OTIF, i.e. the percentage of deliveries that arrive as ordered, when promised and in perfect condition. Many companies that I’ve dealt with simply do not know how well or badly they’re performing – they seem to rely on their customers telling them that they have a problem. This is rather late, unfortunately, since most customers don’t bother to tell you – they just move on.
When these suppliers do measure OTIF honestly, they get a shock to find it’s far lower than they thought – sometimes as low as 50% – whereas the best operators are at over 98% and still working on it!
But it’s essential to know clearly and accurately where you are. Install the key OTIF-related measures across your customer landscape and track them.
Get to the truth by telling your business that a low number is not a crime – it’s a starting point. Tell them the only offence is dishonesty in reporting. Then go to talk and listen actively to customers in a spirit of intent to get better, and tell them so. Get to know their real issues.
Then analyse the results. Look for where the fundamental issues are – is there a problem related to order taking, to product quality, to packing, despatch and shipping or to delivery? Are you taking on orders that exceed your production capacity? Are you able to flex your production sufficiently to meet order changes and requests for emergency delivery? Are you employing an agent or 3rd party who is not representing you appropriately?
In today’s world, product quality has to be a given. Ensure you have a good quality management system in your factory that covers incoming materials and monitors quality compliance right through the manufacturing process and into your warehouse.
Set up sampling checks throughout your delivery process right through to consumer to ensure product integrity is maintained throughout.
Make sure that every complaint by a customer is fully investigated – quickly. Bring back defective product and analyse what went wrong. Give honest feedback to your customer and make good on the defective product as quickly as possible. Invite your customer to the factory. Show them the quality checks you have in place and the improvements you are making. Demonstrate your goodwill.
Delivery on time is critical. You need to agree with the customer and commit to a delivery “time window” of a few hours, within which you guarantee to deliver the goods. Then if you really cannot deliver within that window, inform the customer beforehand so they can plan accordingly.
The best suppliers set up a delivery tracking system where customers can track the delivery progress in enough detail to know with some certainty when they will receive the product.
A focus on OTIF will take you down this path. You will learn to identify both the key issues and the quick wins in improving customer satisfaction. You will have data and information to help you prioritise your improvement focus and efforts. You will be able to feed your customers information about what you’re doing and how you’re improving. These improvements will be visible to them and will help them to build confidence and trust in you.
If you have not yet embarked in this path, it probably all sounds very expensive. There is of course up an up-front dedication of time and effort required to analyse your OTIF delivery to your customers and there are certain costs in setting up your planning and quality management systems. However, a focus on quality, reliability, flexibility and time adherence leads inevitably to significantly reduced operating costs and working capital. Reliability is better, failures are fewer, waste is less, there is far less rework and inventories are lower.
It’s a long journey to perfection, but every step brings improvements to your business, happier customers and attracting new ones through having built trust in your market.
I’d love to hear your views.
Mike Short
CEO. Mentys Executive Search
Picture Credit: Top view of business people putting their hand together in collaboration by Jacob Lund from Noun Project
