On-Time Delivery (OTD) in Manufacturing

On-Time Delivery (OTD) measures how reliably a company fulfills customer orders by the agreed delivery date – expressed as the share of orders or line items that arrive on time or within a defined tolerance window.

OTD is the most important indicator of whether planning, manufacturing, material flow and logistics work together effectively. For customers, what matters in the end is not how high OEE is – but whether goods arrive on time.

Calculating OTD

OTD (%) = (orders delivered on time / total orders in period) × 100

The definition of "on time" varies by industry and customer agreement. Some companies count only exactly on-schedule deliveries; others accept a tolerance window of plus or minus one or two days. This definition must be consistent and documented – otherwise OTD values are not comparable across plants or periods.

OTD vs. Schedule Adherence

Schedule Adherence measures whether the internal production plan is met. OTD measures whether the customer is delivered on time. A company can have high internal schedule adherence and still deliver poor OTD – if planning and actual customer demand are not properly aligned or if buffers between production and shipping are missing. Both metrics complement each other: schedule adherence shows the internal cause, OTD shows the external effect.

Why OTD Is Business-Critical for Manufacturers

Poor OTD has direct financial consequences: contract penalties, express freight costs, production stoppages at the customer and in the worst case order loss. In automotive supply chains, line stoppage costs at the OEM can reach six figures within hours.

OTD is therefore not just a production metric – it is a revenue and reputation issue.

What Systematically Influences OTD

OTD is the result of upstream processes: realistic production planning, stable schedule adherence, high OEE, low scrap and rework rates and functioning material logistics. Weakness in any one of these areas reduces delivery performance – even if other areas perform well. Improving OTD requires understanding the causal chain rather than optimizing the metric in isolation.

FAQ

What is a good OTD value in manufacturing? This depends on industry and competitive environment. In automotive, OTD values of 98 to 99 percent are expected – values below this trigger supplier evaluation processes. In other industries 95 percent is market standard. More important than the absolute value is the trend and consistency across periods.

How does OTD differ from OTIF? OTIF (On-Time In-Full) is the stricter variant: an order only counts as fulfilled if it is delivered both on time and in full quantity. OTD only considers the date. Many retailers and corporate customers have switched to OTIF as their primary delivery metric because partial deliveries on time disrupt their operations just as much as late deliveries.

What role does MES play in improving OTD? The MES provides the data foundation to trace OTD failures back to a specific cause: was it a machine breakdown, a quality hold, a material shortage or a planning error? Without this link between OTD failure and production cause, improvement remains reactive. With real-time order status, OEE data and material availability in the MES, emerging OTD risks can be identified early and countermeasures initiated before the deadline is missed.