Just-in-time logistics, express shipping, or overnight transport: logistics often means meeting tight deadlines and delivering goods to the recipient within specified time windows. On-time delivery is one of the most important key performance indicators (KPIs) for functional supply chains. Learn how to calculate—and, more importantly, improve—your on-time delivery rate.
Table of contents:
- Definition: On-time delivery as a KPI
- How can on-time delivery be calculated?
- Improving on-time delivery: 5 tips for optimization
- Optimizing on-time delivery with TradeLink
- Conclusion: On-time delivery is a key logistics metric
Definition: On-time delivery as a KPI
Logistics should function smoothly at all times—and customers usually only notice it when processes do not run as expected and delays occur. Requirements driven by megatrends such as e-commerce, Industry 4.0, and digitalization have increased massively. Consequently, on-time delivery as a quality indicator directly influences customer satisfaction.
While express and overnight deliveries used to be the exception, they have now effectively become the standard. Often, the achieved on-time delivery rate is also a fixed component of supplier evaluations.
How can on-time delivery be calculated?
On-time delivery is one of the central KPIs for functional and reliable logistics processes. To calculate and continuously monitor on-time delivery, you first need one thing above all: transparent, readily available, and appropriately processed data. Smart tools for delivery coordination not only manage the entire transport process but also provide exactly this data for analysis.
Formula for delivery reliability
A common method for calculating delivery reliability is to determine the delivery accuracy—calculated on a daily or monthly basis. The formula for this is:
Delivery reliability = Number of on-time deliveries / Total number of deliveries in the same period
Improving delivery reliability: 5 tips for optimization
To improve delivery reliability, you can take action at various points within your company—from the delivery promises made by sales, to production planning, and coordination with external carriers. Here is an overview of five key tips:
1. Only promise realistic delivery dates
Setting deadlines that are barely achievable under normal circumstances is essentially a self-inflicted wound when it comes to delivery reliability. To be able to guarantee precise delivery dates at the time of order placement, you need maximum transparency across all process steps. Involve your sales, production, warehouse, and external transport teams. Always remember: meeting the goals you set will sustainably increase customer satisfaction. Therefore, always set delivery dates together with the customer based on realistic parameters.
2. Set priorities
Whether it's personnel, raw materials, or supplier products, resources are often limited and should therefore always be allocated intelligently. To make the best use of your capacity, always set priorities consistently. You will only achieve high delivery reliability if time-critical orders are consistently given priority at every stage of the process.
3. Optimize your processes
Insufficient coordination between internal departments or with external transport service providers often leads to inefficient processes. How frustrating is it, for example, when an urgent product is ready for pickup, but the warehouse dispatch date wasn't scheduled precisely, and the pallet sits there for two days? Most supply chains still hold enormous potential for optimization. A dedicated process analysis creates the foundation for identifying weaknesses and improving them in a targeted manner.
4. Integrate external partners more effectively
Collaborative logistics is the buzzword for smart networking – both internally and externally. Complex supply chains are only stable when all partners are closely integrated. Tip: Use powerful and intuitive tools like TradeLink to improve your warehouse management and delivery coordination. Emails, phone calls, or Excel lists are old-fashioned: digital platforms create the foundation for all parties to work together with high transparency.
5. Set realistic goals
A delivery reliability of 100% – every single day of the year – is a desirable goal, but it is unattainable in day-to-day operations. A full motorway closure alone can delay a delivery and thus lower your reliability score. Therefore, set realistic goals for yourself and your external partners. It is advisable to take a differentiated approach, for example by tracking delivery reliability for express shipments separately from other deliveries.
It is difficult to define what constitutes "good" delivery reliability in general terms. The target value depends too heavily on the specific product, market segment, and target audience. In e-commerce, for example, 90% is already a very good delivery reliability rate, whereas in just-in-time production, even 95% is barely acceptable.
