What does ‘on-time, in-full’ (OTIF) mean in the consumer sector?

McKinsey & Co., and Trading Partner Alliance outline some of the key considerations that should go into developing and using the on-time and in-full delivery metric.

Dock Doors - Yard Management Software OTIF

Supply chain complexity is increasing as customers demand a wider selection of products, a broader choice of channels, and more promotional offers. With expectations of higher on-shelf availability and lower inventory costs, the pressure on delivery performance has intensified—as has the need for manufacturers, retailers, and carriers to work together to create efficient, reliable, and responsive supply chains.

The global pandemic has accelerated this trend, and along the way unveiled some major gaps in the world’s supply chains. To fill these gaps, a growing number of companies operating in the consumer sector have adopted the “on-time in-full” (OTIF) delivery metric.

What is OTIF?

According to McKinsey & Co., OTIF measures the extent to which shipments are delivered to their destination according to both the quantity and schedule specified on the order. “In theory, OTIF should be the ideal mechanism to align the objectives of retailers and manufacturers,” the global consultancy points out.

The problem is that there is no standard definition for OTIF. Because of this, supply-chain participants may interpret the metric differently. For example:

  • Does “on-time” mean on the date requested by the retailer, or the date promised by the manufacturer?
  • Does it mean within the specific delivery slot allocated to the shipment, or any time inside a broader, agreed-upon time window?
  • Should “in-full” be measured at the level of complete orders, line-items, or individual cases?

“These differences matter,” McKinsey says in its report, noting that effective supply-chain collaboration depends upon a precise, common understanding of delivery-performance expectations. “Today’s diversity of approaches means partners waste time arguing over the figures, rather than addressing the root causes of delivery issues.”

Survey Says…

To get industry perspectives on OTIF, the Trading Partner Alliance (TPA) and McKinsey surveyed major retailers and manufacturers of North American consumer packaged goods (CPG). Ninety-two percent of those companies agreed that an industry standard for OTIF would create value.

“They noted that a standard definition would significantly reduce discrepancies and confusion and promote collaboration among trading partners,” McKinsey states. “Collaboration would help partners resolve supply problems more efficiently and effectively—creating value for all supply-chain participants as well as for consumers.”

A common definition for OTIF would also:

  • Create a common view. A common view of supply-chain performance would support consumer-goods supply chains by aligning service expectations; enabling joint performance management; and supporting performance benchmarking.
  • Streamline data complexity. “Retailers and manufacturers end up devoting significant time to explaining and reconciling differences in reported data,” McKinsey points out. “Carriers are often caught in the middle, as both retailers and manufacturers push them for improved performance based on inconsistent data and requirements.”
  • Reduce supply chain complexity. Because each retailer has a different definition of OTIF, manufacturers must meet a variety of different delivery standards and keep up with each retailer’s changes to its individual definition. “Even the major retailers use different definitions, and their definitions keep evolving,” McKinsey notes.

So what’s the solution? A viable working definition of OTIF, which McKinsey says would look like this:  “Case quantity that is delivered to the destination by the requested delivery date, calculated as a percentage of the ordered quantity.”

The other parameters would include:

  • Any overdelivered quantity or inaccurate product shall be disregarded.
  • Arrival at the destination facility (rather than when checked in or unloaded, which may be subject to delays outside the manufacturer’s control).
  • The requested delivery window should be the delivery date requested at the time of order placement, adjusted for any retailer-caused appointment delay, measured to the end of the working day and with a one-day early allowance.

$15-$20 Billion in Lost Sales

As the industry works toward a common definition for OTIF, the complexities of running the world’s supply chains will increase exponentially. “Consumers expect products to be on the shelf,” McKinsey points out, noting that the U.S. food retail industry loses an estimated

$15-$20 billion in sales (2%-3% of its total sales) every year due to out-of-stock or unsaleable merchandise.

“The main operational challenge for the consumer sector is to achieve high levels of on-shelf availability,” it adds, “while keeping supply chain costs down and inventories under control.”

PINC named Top Supply Chain Projects for 2020 by Supply & Demand Chain Executive

TOP 100 SDCE Yard Management Solution

Union City, CA – July 29th, 2020 –  Supply & Demand Chain Executive, the executive’s user manual for successful supply and demand chain transformation, has selected PINC, the leader in digital yard™ solutions, as a recipient of an SDCE 100 Award for 2020.

The SDCE 100 spotlights successful and innovative projects that deliver bottom-line value to small, medium and large enterprises across the range of supply chain functions. These projects can serve as a map for supply chain executives looking for new opportunities to drive improvement in their own operations. These initiatives also show how supply chain solution and service providers help their customers and clients achieve supply chain excellence and prepare their supply chains for success.

Since its founding in 2004, PINC has been a pioneer in providing real-time visibility and workflow orchestration to yard operations across distribution centers and manufacturing plants worldwide. PINC’s platform is currently utilized by an array of Fortune 1000 enterprises and gives companies a cost-effective way to move inventory faster and optimize their supply chain.

“Innovation is essential in driving the supply chain industry forward, and thanks to these valuable partnerships, companies of all sizes are able to achieve success in projects that matter,” says Marina Mayer, editor for Supply & Demand Chain Executive. “From business intelligence systems and supply and demand planning to inventory reduction and procurement solutions, the SDCE 100 offers proof-of-concept that with the right planning and execution, anything is possible.”

“We are very grateful for this award during one of the most challenging years of this century,” said Rafael Granato, Vice President of Marketing at PINC. “Given the uncertainties and increased customer expectations placed upon trailer yards, we are playing a more vital role at the termination points of transportation networks, by expediting shipments and reducing transportation costs.”

About PINC:

PINC provides scalable software, hardware, and services that enable companies to identify, locate, and orchestrate inventory throughout the supply chain predictably and cost-effectively. The company’s cloud-based real-time tracking platform, powered by an Internet of Things (IoT) sensor network that includes passive RFID, GPS, computer vision, cellular, and other sensors, provides actionable insights and connected expert guidance that allow organizations to optimize their supply chain execution. Visit PINC at www.pinc.com. 

About Supply & Demand Chain Executive:

Supply & Demand Chain Executive is the executive’s user manual for successful supply and demand chain transformation, utilizing hard-hitting analysis, viewpoints and unbiased case studies to steer executives and supply management professionals through the complicated, yet critical, world of supply and demand chain enablement to gain competitive advantage. Visit us at www.SDCExec.com.

KEARNEY & CSCMP: How the Logistics Industry is Navigating the COVID Crisis

New report from Kearney and CSCMP paints a picture of a resilient industry that’s increasingly turning to technology and automation to help navigate the COVID crisis and subsequent economic downturn.

dock scheduling - yard management

Coming off a very strong year in 2019, the logistics industry is proving itself to be both adaptive and resilient in the face of major adversity in 2020. Impacted by the convergence of a global pandemic and economic downturn, the industry is in the process of shaking off these negative impacts and learning how to operate in the “new normal” business environment.

These and other insights were recently unveiled in the 31st Annual Council of Supply Chain Management Professionals (CSCMP) State of Logistics Report. Developed by Kearney, CSCMP, and a team of industry leaders, the annual report covers the macroeconomic factors affecting logistics, insights from industry leaders, discussion of important trends, detailed analysis of each major logistics sector, and a strategic assessment of the industry.

“Globally, countries are grappling with halting recoveries of supply, ongoing demand destruction, and secondary waves of infection—and the U.S. is no exception,” Kearney points out. “This painful and chaotic period is causing logisticians and all who depend on them, to adapt and evolve. As they fight to survive, to operate, and then to win anew, both shippers and carriers will depend on more quickly adapting logistics capabilities.”

Recovery Ahead

In 2019, U.S. business logistics costs (USBLC) rose 0.6 percent to $1.63 trillion, or 7.6 percent of 2019’s $21.43 trillion GDP. “Yet in mid-2020, that all seems like history,” Kearney points out. “The pandemic, and global measures taken to reduce its further spread, have decimated supply chains, scrambled logistics capabilities, and destroyed huge swaths of demand. The size, shape, and timing of a recovery remain in question.”

According to Kearney, the pandemic has also highlighted the value of the logistics industry. “Whether it’s delivering critical medical supplies or allegedly hoarded toilet paper, logistics is essential to national security and wellbeing,” it says. “Many of its employees were rightly labeled as essential workers.”

Some signs are optimistic. E-commerce continues to boom, amplified by the online shopping of those sheltering at home, Kearney reports. And, some carriers maintained profits despite declining volumes in 2019, suggesting a commitment to pricing discipline that may help them survive the bigger drops of 2020.

Going forward, it says supply chains will need to become more resilient, better able to adjust to, and recover from future difficulties. “The shift away from single-source, cost-focused supply functions may pose new challenges to logistics,” Kearney cautions, “which itself is having its resilience tested in this crisis.”

Warehousing is a Bright Spot

According to Kearney, the warehousing market continues its growth. In 2019, rents kept rising and vacancy rates stayed near historic lows. E-commerce continued to drive growth, especially in smaller, high-amenity urban warehouses. “The fourth quarter of 2019 represented the highest square footage completed in a single quarter on record,” it says, “and the vacancy rate barely budged.”

In 2020, the disruption of consumer supply chains caused by the coronavirus pandemic is expected to drive a new surge in warehousing demand, especially for temperature-controlled warehouse space, as more consumers order food online. “Pandemic e-commerce is leading to an expected increase in adoption of warehouse automation solutions to keep costs and operational complexity in check even further,” it says.

For example, sales of autonomous mobile robots (AMRs) are estimated to double to $27 billion by 2025. Overall, it is estimated that a 5 percent bump in safety-stock inventory will require about 750 million square feet of industrial space as companies soften their lean-inventory strategies.

“The rise in stock levels should spur industrial activity,” Kearney predicts, “given the expectation that the warehouse construction pipeline will remain full and warehouse availability will remain tight.”

Agility Trumps Forecasting

In a recent article by Supply Chain Dive entitled Unilever CSCO: Agility beats forecasting when the supply chain is stressed, Chief Supply Chain Officer Marc Engel emphasizes the need for an accelerated digital transformation during these challenging times. He comments why

“Agility does trump forecast[ing],” the CSCO said. “At the end of the day, every dollar we spent on agility has probably got a 10x return on every dollar spent on forecasting or scenario planning.”

Unilever is working toward automating processes and leveraging the data collected to become more agile and accelerate its supply chain.

Technology Drives Logistics

The implications of the COVID-19 crisis have reemphasized the value of technology in logistics. Even providers previously hesitant to invest in digital yard management solutions, shipment location tracking, or electronic signatures, claiming such digital technologies were unnecessary, are now embracing them as table stakes.

With rising labor costs, and despite the COVID-19-induced recession, shippers and 3PLs are looking to automation to make logistics more efficient. While a serious uptake of autonomous trucking is still five to 15 years away, legions of mobile robots are already working alongside humans in warehouses and automated systems for yard and transportation orchestration are enabling those organizations to gain agility.

“In general,” Kearney says, “winners will emerge from this crisis with more digitally savvy logistics operations, especially in the areas of creating transparency and interfaces while reducing needs for physical labor across modes and nodes.”

PINC Receives Significant Growth Equity Investment From Accel-KKR

PINC AKKR

 

Investment Will Fuel PINC’s Strategy to Become a Global Category Leader in Supply Chain Management Software

Union City, CA – June 16, 2020 – PINC, the leader in digital yard™ solutions, today announced that it has secured a significant growth equity investment from Accel-KKR, a leading technology-focused private equity firm. The investment will fuel PINC’s momentum in becoming a global category leader in supply chain management software through strategic acquisitions and a focused organic growth plan.

Gartner has estimated supply chain management software to be a $17 billion addressable market growing at approximately 10% a year. However, with 66% of logistics budgets spent on moving only 10% of total inventory, the remaining 90% of inventory at rest is not optimized for bottom-line impact and efficiency gains.

Since its founding in 2004, PINC has been a pioneer in providing real-time visibility and workflow orchestration to yard operations across distribution centers and manufacturing plants worldwide – achieving Gartner’s “best of breed” status in this category. PINC’s platform is currently utilized by an array of Fortune 1000 enterprises and gives companies a cost-effective way to move inventory faster and optimize their supply chain.

“As global trade and consumer demands drive more complexity, effective yard management has quickly become pivotal in robust supply chain management practices,” said Matt Yearling, CEO of PINC. “The linkage between transportation and warehousing needs to be more seamless when complexity increases, and strong digital yard management can be a major operational cost driver in improving inventory management, labor costs, asset utilization, sustainability and facility costs. Together with Accel-KKR and its deep domain expertise in supply chain management technology, PINC is well-positioned to become a category leader in a fast-growing field, and ultimately serve the market and our customer base with more innovations and strategic acquisitions. We are tremendously excited about the company’s future with Accel-KKR.”

“We are thrilled to welcome Matt and the PINC team to the Accel-KKR portfolio,” said Park Durrett, Managing Director at Accel-KKR. “Our firm has a strong track record of investing in and building successful supply chain software businesses, and we look forward to doing the same with PINC.”

“While transportation and warehouse management have been the focus of supply chain management tech spend over the last decade, there is now substantial demand for the digitization of the yard,” said Andrew Zbella, Vice President at Accel-KKR. “PINC is truly best in class and poised to solve complex and costly inventory management problems for customers whose businesses could grind to a halt with the smallest hiccup in their supply chain.”

“Indeed, there has not been a more important test of PINC’s capabilities than during this unprecedented time of disruption caused by the COVID-19 pandemic. PINC supported numerous essential Fortune 1000 companies seamlessly despite a massive surge in volume and velocity, ensuring that these organizations have been able to serve their end customers under challenging circumstances,” Accel-KKR’s Durrett added. “PINC perfectly embodies the kind of investment that Accel-KKR seeks: mission-critical software in an enduring industry with compelling growth opportunities led by a strong management team.”

About PINC:
PINC provides scalable software, hardware, and services that enable companies to identify, locate, and orchestrate inventory throughout the supply chain predictably and cost-effectively. The company’s cloud-based real-time tracking platform, powered by an Internet of Things (IoT) sensor network that includes passive RFID, GPS, computer vision, cellular, and other sensors, provides actionable insights and connected expert guidance that allow organizations to optimize their supply chain execution. Visit PINC at www.pinc.com.

About Accel-KKR:
Accel-KKR is a technology-focused investment firm with over $9 billion in capital commitments. The firm focuses on software and IT-enabled businesses, well-positioned for topline and bottom-line growth. At the core of Accel-KKR’s investment strategy is a commitment to developing strong partnerships with the management teams of its portfolio companies and a focus on building value alongside management by leveraging the significant resources available through the Accel-KKR network. Accel-KKR focuses on middle-market companies and provides a broad range of capital solutions including buyout capital, minority-growth investments, and credit alternatives. Accel-KKR also invests across a wide range of transaction types including private company recapitalizations, divisional carve-outs and going-private transactions. Accel-KKR is headquartered in Menlo Park with additional offices in Atlanta and London. Visit accel-kkr.com.

Media Contact:
Rafael Granato
Vice President of Marketing
PINC
+1 (510) 474-7509
press@pinc.com

Todd Fogarty
Kekst CNC
T +1 (212) 521-4854
todd.fogarty@kekstcnc.com

Practicing Social Distancing while Keeping Inventory Moving during COVID-19 pandemic

In these uncertain times, companies are turning to technology to help them comply with social distancing rules and to keep their workers and drivers safe in any conditions.

PINC Kiosk automated gate management

The global pandemic has thrown manufacturers, distributors, and retailers into a mode that most have never experienced before. While social distancing rules, shutdowns, and high demand for certain product groups are top-of-mind right now, employee and driver safety should also be factored into an organization’s overall pandemic response.

Research firm Gartner, Inc. sees technology as a key enabler for companies that are implementing new driver and safety measures. “As capacity continues to tighten and there are fewer drivers on the road, it’s a requirement to keep them safe,” Gartner’s Carly West said in a press release.

“While safety is especially important now, it should be a key issue for logistics leaders at all times,” West continues. “Fortunately, there are a variety of technologies available that increase driver safety and also help run more efficient operations now and in the world after COVID-19.” Gartner’s top options for companies looking to enhance employee and driver safety include:

Tech-enabled virtual practices enabling social distancing 

Technology solutions help reduce physical contact to a minimum. Routine procedures like gate check-ins and paperwork signing can move to the cloud via software-as-a-service (SaaS) solutions. Real-time transportation visibility platforms flag shipments carrying essential goods, so staff can already prepare with protective gear, such as face masks and be in place to retrieve or offload quickly,” West said. “Proactive alerts are also a good practice for the last-mile delivery to end consumers. Tracking technology allows them to see when the delivery is approaching their home, as well as when it has arrived.”

PINC’s YMS solution, for example, offers functionalities like gate automation, appointment scheduling, real-time visibility in the yard, trailer movement automation, automated alerts and notifications, and enterprise visibility.

PINC offers two types of self-service gates PINC Kiosks and PINC Dropbox. PINC Kiosk includes a touchscreen kiosk with an optional PINC RFID tag dispenser for drivers to self-check-in or out. Shipment/appointments information can be automatically provided during check-in through integration with any system of record. Once the details are validated by the driver, he or she is presented with a drop location based on criteria (i.e., live/drop, type of inventory, type of equipment, load status, etc.). The gate arm opens automatically and the driver proceeds.

On the exit side, PINC Dropbox is an automated system for auto-check-out drivers and trailers from facilities. During check-out, drivers insert PINC’s RFID tags inside of a dropbox similar to a mailbox, and the driver and trailer will be checked-out in the PINC YMS, and the gate arm will rise automatically if all criteria are met.

Some of PINC’s customers are leveraging PINC Kiosk and PINC Dropbox to emphasize social distancing at their facilities and protect employees and drivers coming to these facilities. There’s no more the need for gate personnel or shipping and receiving office teams to interact with drivers at check-in and check-out.

“Allowing drivers to wait in their truck makes it easier for all of us to practice social distancing. Previously, the driver would be waiting in the lounge to talk to the DC after completing check-in.“ – L. M., Major Beverage Manufacturing company.

These automatic processes streamline gate procedures, increases the velocity of check-in and check-out of trailers, yard trucks, shuttle trucks, tractors, and drivers, and loads can be electronically reconciled with purchase orders or bill of ladings. The information to be captured at the gate during check-in or check-out can be customized in the YMS. More importantly, they enable organizations to keep truck drivers and their employees safe during this public health crisis.

Monitor and Locate Critical Items Moving Through the Supply Chain with IoT Sensors

For product safety, supply chain leaders should consider using sensors on products and trailers to keep products safe. Sensors can be used within trailers or products to track the movement of the product on the road and set alerts for deviations or issues,” Ms. West said.” Using technology to track critical and expensive products is a smart practice for companies to have better control on location and safety of their assets.” 

As we know, misplaced or stolen trailers and containers parked at facilities also cause a major disruption to the supply chain. We would like to add to West’s point that It’s also imperative that trailers, containers, and inventory are tracked not just over the road but also while these assets are parked at facilities across the U.S.A.   

PINC Real-time location system (RTLS) enables users to track and locate assets in real-time using passive RFID, GPS, and other sensors. All the information collected is presented online on PINC’s yard platform. Through PINC’s yard management application, users access real-time yard inventory lists, count, and history information eliminating the need for yard checks.

Information is readily available in the application in the form of reports, digital yard maps, digital whiteboard, and dashboards. Also, information can be filtered, and this functionality enables users to define, create categories of trailers, and group them to facilitate and expedite trailer search. Also, resulting matches can be used to feed other activities like recommending specific slots for where the assets should be parked, dock doors they need to be moved to, or displayed on the facility map.

PINC also provides the system of record to the assets (trailer, container, dry, reefer, …) on the yard to the customer’s systems such as WMS, TMS.

Our customers call the PINC YMS the “Google of trailers.” Because it’s easy a fast to find any information associated with a trailer or shipment in PINC’s yard management application.

PINC Yard Management System

Your Facility Live in 2 Weeks

PINC’s yard management system is highly configurable and modular. It is the only turn-key solution that can evolve from SaaS only implementation to SaaS + IoT Hardware and is scalable to enterprise-wide.

PINC’s automation engine enables facilities to simplify workflows and improve efficiencies by letting PINC YMS automatically check-in and out trailers, recommend a parking spot to drivers, notify a user about an event, notify a carrier about a load status, send an email informing about demurrage and detention fees, generate a report and share it, change the status of an asset, auto-create a move for an asset, and much more.

To help you navigate through these tough times, PINC has a dedicated team that can bring your facility operational in 2 weeks and our deployment and training can be totally virtual.

PINC’s Matt Yearling named Rock Star of the Supply Chain by Food Logistics magazine

Matt Yearling - Food Logistics - Supply Chain Rockstar

UNION CITY, CA – April 6, 2020 — Food Logistics, the only publication exclusively dedicated to covering the movement of product through the global food supply chain, has named Matt Yearling, CEO of PINC to its 2020 Food Logistics Champions: Rock Stars of the Supply Chain award.

The Food Logistics Champions: Rock Stars of the Supply Chain recognizes influential individuals in our industry whose achievements, hard work, and vision have shaped and attained milestones in safety, efficiency, productivity and innovation through the global food supply chain. From early pioneers and entrepreneurs to non-conformist thinkers and executive standouts, this award aims to honor these leaders and their contributions to our industry.

“The 2020 Food Logistics Champions: Rock Stars of the Supply Chain exhibits the true rock stars of the industry, those that go the extra mile, so to speak, to ensure their company’s supply chains are being operated in an efficient, safe and transparent manner,” says Marina Mayer, editor-in-chief of Food Logistics. “These professionals are a true example as to why today’s food and beverage supply chains are in a position to curtail tomorrow’s consumers’ demands, and why today’s youth should consider the supply chain and logistics industry as a possible path of employment.”

“We understand the important role we play in serving the global food supply chain industry and appreciate the trust our customers have in us for their yard management and inventory management needs,” said Matt Yearling, PINC CEO. ”This award is more of a nod to the entire PINC team. They are all rockstars for their dedication, especially during this challenging time.”

Recipients of this year’s 2020 Food Logistics Champions: Rock Stars of the Supply Chain award will be profiled in the March 2020 issue of Food Logistics, as well as online at www.foodlogistics.com.

About PINC
PINC provides scalable software, hardware, and services that enable companies to identify, locate, and orchestrate inventory throughout the supply chain predictably and cost-effectively. The company’s cloud-based real-time tracking platform, powered by aerial inventory robots™ (drones) and an Internet of Things (IoT) sensor network that includes passive RFID, GPS, computer vision, cellular, and other sensors, provides actionable insights and connected expert guidance that allow organizations to optimize their supply chain execution. Visit PINC at www.pinc.com.

About Food Logistics
Food Logistics is published by AC Business Media, a business-to-business media company that provides targeted content and comprehensive, integrated advertising and promotion opportunities for some of the world’s most recognized B2B brands. Its diverse portfolio serves the construction, logistics, supply chain and other industries with print, digital and custom products, events and social media.