On Time Delivery (OTD)

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SEF Reference Guide G22  |  Manufacturing OpEx Maturity Assessment

What it is

On Time Delivery (OTD) is the share of orders, or order lines, delivered on or before the date you committed to the customer. It is the simplest test of whether the operation keeps its promises, and it is the number most customers track about you whether you track it or not.

Lead time is the elapsed time from customer order to delivery. OTD asks “did we hit the date?” Lead time asks “how long did it take?” The two move together. Long, variable lead times make dates hard to hit, and missed dates push planners to pad lead times, which makes them longer still.

The measure only works if the rules are fixed in writing: which date counts as the commitment, what counts as on time, and whether you measure orders, lines, or quantities. Most arguments about OTD are really arguments about these rules.

Why it matters

• Customer retention and price. Reliable delivery is often the tie-breaker when products and prices are similar. Chronic lateness invites penalties, dual sourcing, and lost share.
• Cash. Late orders are late invoices. Customers who distrust your dates also hold extra safety stock or split orders, which makes your demand noisier.
• Cost. Missing dates creates expediting: premium freight, overtime, broken setups, and partial shipments.
• Capacity. Chasing late orders scrambles the schedule and steals time from the constraint (see G11).
• Honest signal. OTD exposes problems anywhere in order-to-cash: order entry, planning, supply, production, quality, and shipping.

Key terms

Term	Meaning
OTD	On Time Delivery. Orders (or order lines) delivered on or before the committed date, as a percentage of all orders delivered in the period.
Lead time	The elapsed time from customer order to delivery.
Committed date	The delivery date you confirmed to the customer at order acknowledgment. SEF measures against the first committed date, not a later rescheduled one.
Requested date	The date the customer asked for. OTD to request is a tougher, useful second measure.
On time window	The agreed tolerance around the committed date (for example, 0 days late and up to 3 days early). Write it down.
Line-level OTD	Each order line counts once. More sensitive than order-level OTD and usually the better choice.
OTIF	On Time In Full. The line must arrive on time and with the full quantity. Stricter than OTD.
Perfect order	An order delivered complete, on time, undamaged, and with correct documents. A supply chain measure defined in the ASCM SCOR model.
Quoted lead time	The lead time you publish or promise. Compare it with actual lead time.
Manufacturing lead time	Time from release to the floor until finished. A subset of order lead time.
Late reason code	A standard category assigned to every late line so causes can be counted.
Little’s Law	Average lead time = average WIP / average throughput (John Little, 1961). Less WIP at the same output means shorter lead time.

How to do it

1. Write the definition. One page, signed by operations, sales, and finance. State: the committed date used (first confirmation), the unit (order line recommended), the on time window, whether you measure at ship date or customer receipt (receipt is what the customer sees; if you use ship date, subtract planned transit time), and how partial shipments count.
2. Get the data from the system, not by hand. Pull every line shipped in the period with order date, committed date, ship date, quantity ordered, and quantity shipped. A hand-kept tally drifts toward good news.
3. Calculate weekly, publish monthly. OTD % = lines delivered within the window / lines delivered in the period x 100. Also track OTIF and average days late for late lines.
4. Code every late line. Use a short list of reason codes (see Template). The person closest to the delay assigns the code within a week. “Other” above 10% means the list needs work.
5. Measure lead time the same way. For each line, lead time = delivery date minus order date. Report the average and the spread (for example, the 90th percentile). Split into order entry, waiting for release, waiting for material, production, and shipping if the system has the timestamps.
6. Post it where the work happens. Put OTD and the late reason Pareto on the information boards and in the tiered meetings (see G03 and G04). Review late lines daily at the area level.
7. Leadership review and targets. Review monthly. Set a target for OTD and for lead time, based on customer expectations and the current baseline.
8. Run improvement projects on the top reasons. Use A3 or DMAIC on the largest late reason categories. For lead time, attack WIP, batch sizes, changeovers, and queue time (see G12 and G13).
9. Protect the promise. Check capacity and material before confirming a date. Many OTD failures start at order entry with a date nobody checked (see G19 and G20).

What each maturity level looks like

PF-2 On Time Delivery (OTD)

Level	Assessment wording	What it looks like on the floor	How to move up
1	OTD is not measured or displayed.	Lateness is known through customer calls and expediting. People describe delivery as “mostly fine.” No shared number exists.	Write the OTD definition and pull a baseline from the last 3 months of shipments.
2	OTD is measured and published.	A monthly OTD figure is calculated from system data using a written definition and shared with the team.	Take OTD to the monthly leadership review. Set a target. Start coding late reasons.
3	As Level 2, plus leadership reviews performance and sets improvement targets.	Leaders review OTD and the late reason Pareto monthly, ask about the biggest misses, and hold written targets for OTD and lead time.	Launch structured projects on the top late reasons and on lead time.
4	As Level 3, plus structured problem solving projects focus on OTD and/or lead time reduction.	Active A3 or DMAIC projects are attacking named causes (for example, material shortages on purchased castings, or queue time in paint). Project status is visible on the boards.	Close projects with measured results. Standardize the fixes. Keep the Pareto current and pick the next cause.
5	As Level 4, plus trends are good and stable or improving.	Twelve or more months show OTD at or above target and stable or rising, with lead time stable or falling. The definition has not been loosened to get there.	Raise the bar: measure OTD to customer request date, move to OTIF, and shorten quoted lead times.

Evidence to look for

Document

• Written OTD definition (committed date, unit, window, ship or receipt basis).
• Shipment data extract for a recent month. Recalculate OTD from it yourself and compare with the reported figure.
• List of late reason codes and a completed late reason log.
• A3 or project charters on OTD or lead time.

Observation

• OTD and late reason Pareto on the information boards, current to at least last week.
• Late lines discussed in the daily or tiered meeting.
• WIP levels and queues at the constraint and at shipping. Piles of WIP mean long lead times.
• Expedite tags, hot lists, or premium freight labels in shipping.

Statement (questions to ask and who to ask)

• Customer service: “How is the promise date set? What happens when a date will be missed?”
• Planner: “How often do you reschedule the committed date? Is OTD measured against the original or the new date?”
• Shipping lead: “What makes orders late most often?”
• Plant manager: “What is your OTD target and what are you doing to reach it?”
• If possible, a customer’s purchasing contact: “How do you rate our delivery?”

Management report

• Monthly OTD and OTIF with target and 12 month trend.
• Lead time average and spread over time.
• Late reason Pareto with actions against the top items.

Common pitfalls

• Measuring against the rescheduled date. If the committed date moves every time the order is late, OTD looks perfect and means nothing. Use the first committed date.
• Order-level only. A 20-line order with one late line counts as late at order level but hides which items fail. Line level shows the pattern.
• Wide or unwritten windows. “Within the week” turns late into on time. Early deliveries that the customer did not ask for are also a miss for many customers.
• Ship date treated as delivery date. Customers feel the receipt date. Account for transit.
• Padding lead times. Quoting longer lead times raises OTD on paper but loses orders and adds WIP. Improve flow instead.
• No reason codes. Without causes, reviews end in “we need to try harder.”

Template

SEF OTD Calculation Sheet

(one row per shipped order line)

Field	Example
Order no. / line	45872 / 3
Customer	Customer A
Part no.	100-2231
Order date	2026-03-02
Requested date	2026-03-20
First committed date	2026-03-24
Actual delivery date (receipt or ship + transit)	2026-03-26
Qty ordered / qty delivered	200 / 200
Days late (delivery minus committed, 0 if early or on time)	2
On time? (within window: Y/N)	N
In full? (Y/N)	Y
Lead time (delivery minus order date, days)	24
Late reason code	M2
Action / owner	Expedite casting PO process / Buyer

Summary formulas

• OTD % = count of “On time = Y” / count of lines x 100
• OTIF % = count of lines with On time = Y and In full = Y / count of lines x 100
• Average days late = sum of days late / count of late lines
• Average lead time and 90th percentile lead time, per product family

Late reason codes (starter list)

Code	Reason
O1	Order entry error or late order entry
P1	Date confirmed without capacity check
M1	Purchased material late from supplier
M2	Material shortage due to planning error
C1	Capacity shortfall at constraint
E1	Equipment breakdown
Q1	Quality hold, scrap, or rework
S1	Shipping or carrier delay
X1	Customer-caused change (document it, still count it as late unless the committed date was formally renegotiated before it passed)

First 30 days

Week 1: Agree and sign the OTD definition. Pull shipment data for the last 3 months and calculate baseline OTD, OTIF, and lead time.

Week 2: Code a sample of late lines from the baseline to build a first Pareto. Refine the reason code list.

Week 3: Post OTD and the Pareto on the main information board. Add late lines to the daily meeting. Start coding every new late line.

Week 4: Hold the first leadership review. Set OTD and lead time targets. Charter one improvement project on the largest late reason.

Further reading

• Womack, J. and Jones, D. Lean Thinking (1996). Flow and lead time reduction.
• Stalk, G. and Hout, T. Competing Against Time (1990). Why time is a competitive weapon.
• Hopp, W. and Spearman, M. Factory Physics (1996, later editions). Lead time, WIP, and variability, including Little’s Law.
• Little, J.D.C. “A Proof for the Queuing Formula: L = λW.” Operations Research 9(3), 1961. https://pubsonline.informs.org/doi/10.1287/opre.9.3.383
• ASCM, SCOR Digital Standard (Perfect Order Fulfillment and delivery reliability metrics). https://www.ascm.org