Articles

KPIs provide an objective way to analyze business success and know when to seek improvements. DIFOT is one of the vital KPIs to know about– it’s a crucial metric for evaluating your supply chain efficiency. Below, we’ll explain it, how it works, and how to calculate it for your business.

What is DIFOT?

It is an acronym for delivery in full, on time. DIFOT measures how often your customers get the product they need at the right time.

The DIFOT meaning has two parts:

• “Delivery in full,” indicating that a customer received and accepted an item they ordered.
• “On time,” signifying that the customer received the item on or before their requested date.

This KPI is easy to understand and measure.

DIFOT vs. OTIF

When researching DIFOT, you’ll likely encounter another acronym called OTIF. However, you shouldn’t get confused. DIFOT and OTIF mean the same thing.

The OTIF meaning is on time in full, just another way to say delivery in full, on time. An OTIF supply chain keeps your customers satisfied with your services.

How to calculate DIFOT

The primary factor for calculating DIFOT is the number of deliveries. Follow these steps:

1. Note how many items were delivered to customers in full (total number of deliveries).
2. Determine the number of items delivered on time.
3. Calculate the percentage of items delivered in full and on time compared to the number of deliveries.

For instance, you delivered 500 items to customers, and 450 were delivered in full and on time. Your DIFOT is (450/500) expressed as a percentage, giving 90%.

DIFOT requires keeping accurate records of all your deliveries. Firstly, record the expected delivery date whenever a customer orders an item. When that item finally gets delivered, record if it was delivered on time.

The good news is that supply chain software helps businesses keep accurate delivery records– the logistics personnel just need to log whenever an item gets ordered, its expected delivery date, and the actual delivery date.

Why is DIFOT a critical KPI for business success?

DIFOT accurately measures your supply chain’s efficiency. It evaluates your business’s core function– to deliver customers their ordered items at the expected date. The higher your DIFOT score, the higher your customer satisfaction. A low DIFOT score means many customers are displeased about not receiving their products in full and on time.

DIFOT is considered a better performance indicator than alternatives – such as shipped-on-time (SOT) or on-time performance (OTP) – because it looks at deliveries from the customer’s viewpoint. A high DIFOT score signifies customer commitment and will make clients more willing to work with you.

How can I improve my business’s DIFOT score?

There’s always room for improvement in your DIFOT score. Aim for 100% DIFOT or something close to this figure. Any score below 90% signifies delivery issues that need to be resolved.

The main factors affecting your DIFOT score are suppliers, shipping routes, and transit times. Ensure you work with reliable suppliers that deliver your items on time. You must also work with reliable logistics companies to ship products to your customers on expected dates.

Watch out for your business’s fill rate. The fill rate definition is the percentage of orders you can satisfy at a given time without running out of inventory. Your fill rate should be as close to 100% as possible.

Treat any shipping hiccups you observe urgently, ensuring customers get what they need at the right time. Any lag in your DIFOT score should be resolved immediately.

How to Monitor DIFOT

Some companies use spreadsheets to track deliveries and calculate DIFOT. You can use an Excel formula to calculate this metric based on your number of total deliveries and on-time deliveries. However, it’s much better to use supply chain software that helps you record deliveries and calculate DIFOT automatically.

With a spreadsheet, you might make mistakes when inputting the data. You’re less likely to make such mistakes with a designated supply chain software.

Conclusion

We’ve introduced you to DIFOT, a critical KPI for business success. This metric greatly affects customer satisfaction, making it vital to keep it as high as possible. With the information we’ve provided, it should be easy to understand and calculate DIFOT for your business henceforth.