On-time delivery is the share of deliveries that arrived when they were promised: on-time delivery rate = deliveries received on or before the promised date ÷ all deliveries × 100. It works both ways: your suppliers' deliveries to you, and yours to your customers. For a small producer the supplier side is the one that stops production, because a batch can't start without its ingredients and can't be bottled without its bottles. In the example below, a distillery's suppliers deliver 12 of 16 orders on time in a quarter, 75%, but the glass supplier is on time once in three, and its real lead time is 33 days against the 28 it promises. Below is the formula, a grace window, a quarter of deliveries, what to do with the number, and a free calculator.
The short version
- On-time delivery = deliveries on or before the promised date ÷ all deliveries.
- Some buyers allow a grace window, such as a day late; say which you use.
- Work it out for each supplier, not only overall.
- Record the promised and the actual lead time; the gap is what to plan on.
- A supplier that's often late needs a longer lead time in your plans, or more stock on hand.
- On time and in full together is OTIF; on time alone doesn't say the order was complete.
- TaroStack checks each supplier's lead time against its real deliveries and flags overdue purchase orders. More below.
The formula
On-time delivery rate = on-time deliveries ÷ total deliveries × 100
Days early or late = date received − date promised, so a negative number is early and zero is on time.
Actual lead time = date received − date ordered, against the promised lead time = date promised − date ordered.
The date that counts is the one the supplier promised when you ordered, not the one they gave you later. A grace window, such as one day late counted as on time, suits deliveries that don't stop anything; say so when you report the number.
An example: a distillery's quarter
Iron Range Distilling, a made-up craft distillery in Duluth, Minnesota, I use in these examples, received 16 deliveries from five suppliers between July and September:
| Supplier | Deliveries | On time | On-time rate | Average days late, late ones | Promised lead time | Actual lead time |
|---|---|---|---|---|---|---|
| Arrowhead Grain | 4 | 4 | 100% | 7 days | 6.75 days | |
| Lakehead Glass Supply | 3 | 1 | 33% | 7.5 | 28 days | 33 days |
| Superior Closures | 3 | 2 | 67% | 2 | 14 days | 14.7 days |
| Harbor Label Printing | 3 | 2 | 67% | 1 | 14 days | 14.3 days |
| North Woods Botanicals | 3 | 3 | 100% | 7 days | 7 days | |
| All suppliers | 16 | 12 | 75% | 4.5 |
With a one-day grace window, the label printer's day-late roll counts as on time and the rate is 13 of 16, 81.3%. The number that matters is the glass: two pallets of bottles six and nine days late, so the stills ran and the spirit waited. The fix isn't a sharper email, it's planning on 33 days, not 28, and keeping enough bottles to cover the gap. How a lead time is measured and planned on is in lead time calculation formula, and how much cushion to hold in safety stock formula.
What a good on-time rate is
For a supplier whose late delivery stops production, as close to 100% as possible; for one whose late delivery only costs a day of convenience, a lower rate with a grace window can be fine. The useful comparison is between suppliers of the same thing: if a second glass supplier is on time nine times in ten, that's worth more than a lower price per bottle. Rating suppliers on delivery, quality and price together is in supplier scorecard.
On time, in full
On time alone counts a delivery that arrived on the day with half the corks as a success. OTIF, on time and in full, counts it only if both are true, and it's the stricter number. A receiving log that records what arrived against what was ordered gives both; what to check at the door is in food receiving log template.
Get the calculator
Download the on-time delivery calculator. Two sheets: deliveries, one line for each, where you type the dates ordered, promised and received, and days early or late, on time, within a grace window you set, and the promised and actual lead times fill in, with the totals at the side; and by supplier, with each supplier's on-time rate, average days late and lead times. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.
Where this stops working
The calculator is typed from purchase orders and delivery notes after the quarter. It tells you the glass was late; it doesn't warn you when the next pallet is late, or change the reorder date so you order bottles earlier.
How TaroStack does it
TaroStack checks each supplier's lead time against its real deliveries and flags overdue purchase orders.
Lead times from real deliveries. Each supplier carries its lead time and minimum, and lead times are checked against how long deliveries really take, so the gap between the glass supplier's 28 days and the 33 it takes shows up.
Overdue orders flagged. A purchase order that hasn't arrived by its date raises an alert, so the late pallet is noticed the day it's late, not the day the bottling stops.
Reordering on the right lead time. The reorder list, in days of cover, uses each supplier's lead time, so once the glass supplier's is set to 33 days, the bottles come up for ordering early enough to arrive before they run out.
| The job | Spreadsheet | In TaroStack |
|---|---|---|
| Each supplier's real lead time | Worked out each quarter | Checked against deliveries |
| A delivery that's late today | Noticed when it's needed | An overdue purchase order alert |
| When to order bottles | The promised lead time | Reorder list on the lead time you set |
| Rating suppliers | This calculator | Lead times and price creep by supplier |
Suppliers, purchase orders, reorder lists and alerts are on every plan, from $49 a month. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.