CV-19 Insights

Since its creation by Walmart in August of 2017, OTIF (On Time In Full) has caused some strains between CPG manufacturers and their retailer partners. Under OTIF, the on-time delivery standard is 87%, while the penalty for non-compliance is a 3%  fee based on the shipment’s value.

Despite these OTIF requirements and related fines, some CPGs have indicated that there are benefits to adhering to tough new compliance restrictions. In a recent Supply Chain Dive article, Kraft Heinz outlines how the creation of OTIF helped them to focus their efforts on better data management because it demands a more data-driven approach to performance.

The article quotes Graham Teague, head of customer supply chain at Kraft Heinz, on the advantages of OTIF compliance. He states that OTIF has benefited the entire organization in the long run because “it can measure across dimensions. We can measure OTIF by customer, group of customers, group of products, subset of our network, and we do exactly that.” Teague adds that OTIF pulls together all KPIs, giving Kraft Heinz a “starting place for any review process regarding almost any issue of supply chain performance.”

A key aspect of Kraft Heinz’s compliance success is partnering with technology solutions that enable CPG manufacturers to pull together the necessary insights to take action and improve their OTIF. For example, digital transformation solutions from RSi give CPG manufacturers the tools and analytics they need to effectively manage and improve their supply chain results at major retailer partners, including Walmart, Target and others.

By identifying chronic issues, including persistent out-of-stocks or habitually late DCs, CPG companies can quickly identify nodes within the supply chain that need to be improved. Once these issues are addressed, the root causes that led to the late deliveries or short shipments can be eliminated, resulting in a much more efficient and profitable supply chain – and a much improved OTIF score.

You can read the full Supply Chain Dive article here.