On-time delivery, or OTD, is an important metric that significantly impacts customer satisfaction, customer retention, and customer loyalty. A high OTD rate means customers are receiving their orders promptly and efficiently with minimal interruptions.
Poor resource management, inefficient route planning, inventory management, order fulfillment processes, and lack of transparency can all contribute to a decrease in on-time delivery rates.
By incorporating a complete strategic solution that manages all aspects of on-time delivery rates, customers can have better control and visibility over their processes, leading to improved OTD rates and ultimately, higher customer loyalty and satisfaction.
In this article, we’ll explore the significance of measuring and improving on-time delivery metrics, different types of metrics to track, actionable strategies you can deploy to improve these rates, and mistakes to avoid that lead to a decline in on-time delivery rates.
What is on-time delivery?
On-time delivery is a key performance indicator used to measure the effectiveness of order fulfillment processes when delivering products or services to customers within an agreed-upon timeframe. It’s typically expressed as a percentage of orders that are delivered on, before, or during the scheduled delivery window.
In its most simplest form, an on-time delivery rate can be calculated by dividing the total number of on-time deliveries by the total number of deliveries.
Several factors contribute to your overall OTD rate, and tracking each of these metrics is the most effective way to adapt solutions to improve your on-time delivery percentage. On-time delivery can be measured through several different metrics depending on the nature of the business and the specific delivery types offered.
Types of delivery
The most common types of on-time delivery are:
Same-day delivery
This type of delivery involves getting an order to the customer on the same day it was placed. Same-day delivery is becoming increasingly more popular in e-commerce, and many retailers and delivery services provide this option.
Pickup
Several pickup delivery options can occur, each one offering a convenient option for customers who want to avoid shipping fees and/or don't want to wait for their orders to arrive. These pickup delivery methods include in-store pickup, curbside pickup, as well as alternative locations, and lockers.
Scheduled delivery
Some customers prefer to schedule their deliveries for a specific time and date that works best for them. This option allows them to plan and avoid any inconvenience that may arise from unexpected delays or unavailability.
Expedited delivery
For urgent orders that need to be delivered quickly, expedited delivery is the best option. This type of delivery guarantees that the order will be delivered within a specific timeframe, often at an additional cost to the customer.
By understanding the different types of on-time delivery and customer expectations, businesses can tailor their delivery options to meet their customers' needs and improve their on-time delivery metrics.
Why is having strong OTD rates important?
Customers demand certain needs be met and have several expectations for their deliveries.
Faster delivery options are sought by 65% of surveyed consumers, while 68% of consumers said faster shipping impacts purchasing decisions, and 51% of consumers want access to real-time updates of their order status.
Another clear sign of the importance of guaranteeing on-time deliveries is that 91% of customers expect to receive orders within one week, and 70% would be disappointed if their order is delivered late.
Tracking the various on-time delivery metrics provides insights into the performance of overall delivery operations, and helps to make sure deliveries fulfilled outside the promised delivery window are rare.
By measuring these metrics, enterprise brands can enjoy several significant benefits, such as:
- Increased customer satisfaction
- Improved efficiency
- Cost savings
- Better inventory and supply chain management
- Reduce supply chain issues
- Competitive advantages
What on-time delivery metrics can you measure?
To accurately and effectively track your on-time delivery performance, it’s essential to track eight key metrics.
Each metric requires individual formulas and methods of calculation that, together, affect operational efficiencies.
General on-time delivery
General on-time delivery is the basic measure of how many orders are delivered on time. This metric can be measured as a percentage of deliveries that occur on time versus total orders delivered. It provides an overall view of a company's delivery performance.
Average on-time delivery
Average on-time delivery simply measures the average time it takes for an order to be delivered on time. It can be measured by taking the difference between the actual delivery time and the promised delivery time, for all orders delivered on time, and averaging that difference. Average delivery time provides a more detailed view of a company's delivery performance.
Final delivery time
Final delivery time is the time taken from the point of dispatch to the time when the package is delivered to the customer's location. This OTD metric measures the total fulfillment time taken to complete the entire delivery process and plays a crucial role in determining the overall customer satisfaction level.
Order preparation time
Order preparation time is the time taken to prepare an order once it is received by the business. This OTD metric measures the efficiency of the order fulfillment process and can have a significant impact on the overall delivery time helping to avoid late deliveries.
Enterprises that can minimize their order preparation time can ensure faster order processing and delivery, leading to improved customer satisfaction and loyalty.
Time to destination
Time to destination is the time taken for the package to travel from the origin to its final destination. This OTD metric can be influenced by various factors, including distance, mode of transportation, and traffic conditions.
Time to base
Time to base is the time taken by a driver to reach the base after completing a delivery. This metric is crucial in determining the efficiency of the driver, as it measures how much time a driver spends idle or on the road. An efficient driver will have a shorter time to base, indicating that they are utilizing their time effectively.
Driver performance
Driver performance is a metric that measures the effectiveness and efficiency of the delivery driver. It combines a variety of measurements such as on-time delivery, delivery accuracy, vehicle usage, and fuel efficiency.
By tracking driver performance, enterprises can identify areas of improvement, provide feedback to drivers, and reward top performers. Driver performance is essential for guaranteeing that drivers are meeting company standards and providing high-quality service to customers.
Customer satisfaction
Customer satisfaction is a metric that measures the level of satisfaction customers have with the delivery service. It includes measurements such as delivery accuracy, delivery time, and overall experience. By tracking customer satisfaction, businesses can identify areas of improvement and make changes to improve customer experience.
High customer satisfaction can lead to increased loyalty, customer retention, and more repeat business.
How to improve your on-time delivery performance
Improving OTD metrics is crucial for any business that wants to not only succeed in today's fast-paced world, but thrive in it. The entire order fulfillment process, from pre to post-purchase, requires constant monitoring and significant software integration.
Using an omnichannel solution is the most effective way to improve delivery metrics across the entire retail e-commerce roadmap.
How to improve general on-time delivery
- Utilize technology such as route optimization software to plan more efficient routes and avoid delays.
- Increase communication between dispatchers and drivers to ensure they're aware of any changes in delivery dates or addresses.
- Use inventory management software to improve warehouse management and inventory control to reduce errors and delays in order processing.
How to improve average on-time delivery
- Analyze data to identify trends and common causes of delays, and address those issues systematically.
- Provide additional training or coaching to drivers to improve their time management skills.
- Use real-time data tracking tools to monitor progress and make adjustments as needed.
How to improve final delivery time
- Use real-time tracking to monitor progress and ensure timely delivery.
- Streamline delivery processes to eliminate unnecessary delays, such as requiring customers to sign for deliveries or waiting for loading docks to become available.
- Optimize routes to reduce travel time.
How to improve order preparation time
- Implement better inventory management solutions to reduce the time required to find and prepare orders.
- Optimize warehouse layout and organization to improve efficiency.
- Streamline the order preparation process by reducing the number of steps required.
How to improve time to destination
- Apply route optimization software to plan the most efficient routes and avoid traffic or other delays.
- Monitor real-time traffic patterns and adjust routes as needed.
- Implement better communication between dispatchers and drivers to ensure twitter awareness of any changes in delivery times or addresses.
How to improve time to base
- Optimize the layout and organization of your warehouse or distribution center to reduce travel time.
- Utilize real-time tracking tools to check progress and make adjustments as needed.
- Increase communication between warehouse staff and drivers to ensure efficient loading and unloading.
How to improve driver performance
- Provide additional training and coaching to improve driving skills and time management.
- Implement performance metrics and provide incentives to motivate drivers to improve their performance.
- Monitor and address any safety or compliance issues.
How to improve customer satisfaction
- Take advantage of post-purchase notifications
- Provide accurate and up-to-date delivery information to customers in real time.
- Utilize customer relationship management (CRM) tools to track customer complaints and proactively address any issues.
Overall, using an omnichannel solution is the number one most effective way to manage delivery and order fulfillment, such as Delivery Solutions’ Omnichannel Experience Management (OXM) Platform.
A constant challenge for retailers today is adding new independent SaaS products to cater to different fulfillment methods in unique situations or locations, and as they scale. Incorporating new and different software solutions into your e-commerce tech stack can often lead to bottlenecks, incompatibilities, and inefficiencies.
How Delivery Solutions’ platform can help improve OTD metrics
The platform provides enterprise brands with an omnichannel blueprint that makes adding and connecting new channels extremely simple, providing flexibility today and scalability tomorrow.
Delivery Solutions has built complex algorithms and best-in-class software optimized for ensuring on-time deliveries that consider eligibility and scheduling to find the best delivery provider for each order.
Delivery Solutions ties together out-of-the-box solutions for real-time tracking, route optimization, customer communication, and other tools to help enterprises streamline their delivery processes and improve supply chain efficiency and on-time delivery metrics to:
- Improve on-time delivery rates.
- Boost customer satisfaction and brand loyalty.
- Reduce operational costs.
- Enhance inventory management.
- Optimize routes to reduce travel time
- Monitor driver performance and identify areas for improvement.
- Provide access to over 40 delivery providers
- Communicate more efficiently with drivers and customers to reduce delays
- Track and analyze data to identify trends and opportunities for improvement.
- Allow for the exporting of data into business intelligence tools.
Next step to guaranteeing on-time deliveries for your customers
Tracking and improving on-time delivery metrics is vital for businesses looking to enhance customer satisfaction, reduce costs, increase efficiency, and gain a competitive advantage. Customers demand faster deliveries, greater flexibility, and real-time visibility into the status of their orders, meaning businesses must manage their delivery operations efficiently and rigorously.
This can be difficult.
Implementing a complete strategic solution, enterprises can track, manage and optimize their OTD metrics, improving on-time delivery rates. Delivery Solutions offers businesses better control, flexibility, and visibility over their order fulfillment processes, keeping your customers expectations in mind at all times.
Schedule your demo today to experience the benefits of the Delivery Solutions and how it will improve your delivery operations.