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: 6 Technologies Driving Logistics and Supply Chain Forward in 2020

New insights from Kearney and CSCMP show how technology is helping the logistics industry work smarter, better, and faster in today’s challenging business environment.

Kearney-CSCMP-Technologies-2020

In 2019, organizations around the world were dealing with trade wars, electronics component shortages, labor crunches, and geopolitical issues like Brexit. By early-2020, the entire world’s attention shifted over to fighting a global pandemic and coping with the steep toll it took on human life, livelihoods, businesses, and industries.

In response, the logistics industry has spent the past few months dealing with crises. Now, it’s carving out a path forward in a VUCA (volatility, uncertainty, complexity, and ambiguity) world, where new challenges continue to surface daily.

Some signs are optimistic, according to Kearney and CSCMP’s 31st Annual Council of Supply Chain Management Professionals (CSCMP) State of Logistics Report. For example, e-commerce continues to boom, amplified by the online shopping of those sheltering at home. 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.

“An economic slowdown damaged most sectors of the economy, including logistics,” Kearney points out in its report, which 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.

6 Ways Tech is Making a Difference

In its report, Kearney discusses how the implications of the COVID-19 crisis have reemphasized the value of technology in logistics. Here are six advanced technologies that it says will continue to positively impact the industry for the near term:

1) Artificial intelligence and machine learning: Artificial intelligence (AI) and machine learning (ML) are broad categories, which companies across all stages of logistics are already using to make smarter and quicker decisions. AI and ML directly address the data challenge, helping companies turn existing data into better insights and competitive advantage. “Their importance to the industry is why 20 percent of the AI-100 are in logistics,” Kearney points out, noting that companies can use AI and ML to:

  • Anticipate market changes to make better planning decisions
  • Predict high-demand products, so that warehouses can move them to easy-to-access locations
  • Optimize delivery routes based on real-time traffic and weather conditions
  • Recognize damaged goods before they get delivered
  • Automate simple, repetitive back-office tasks to reduce paperwork, improve productivity, and reduce errors

Calling AI and ML “dominant disruptive forces in logistics,” Kearney says the value they bring is clear. “Barriers to entry are lowering, computing power continues to grow, and ever more data is ever more widely available.

2) Robotics and automation: Kearney breaks robotics and automation technologies down into two categories: moving goods and handling goods.

  • Autonomous trucks are likely to develop in stages: first platooning, then driverless platooning, then full-blown autonomous vehicles operating at scale without drivers all the way from loading to delivery. Similar, but lower-impact, effects can be expected in rail, air, and warehouse drones.
  • In warehouses, robotic shelves can move goods to picking stations, picking systems can use robotic arms with sensors to effectively grasp many shapes of objects, and autonomous palletizers can robotically build pallets from units and cases.

Noting that autonomous vehicles still need to make significant headway on safety and regulatory issues, Kearney says stakeholders need to come together to build the vision of a driverless world, which is likely still years away. “Platooning will come first, in three to five years, and fully autonomous vehicles will become a reality in about 10 years,” it concludes. “However, the handling technologies focused on picking, sorting, and palletizing are already in full swing.”

3) Augmented reality and virtual reality: Augmented reality (AR) and virtual reality (VR) can make processes more efficient, thus improving productivity, especially in warehousing and delivery. The earliest examples have focused on aiding warehouse product picking by displaying instructions on smart glasses for items in the field of vision. Glasses can also provide instructions for employees performing maintenance tasks.

“Eventually they could even help employees find the right pallets when loading or unloading a truck,” Kearney adds. “The approach can reduce lead times, error rates, and job training requirements.” Similar approaches on vehicle windshields could aid delivery people, perhaps even by showing a picture of the package’s intended recipient.

“In the near term, AR and VR will likely remain limited to existing use cases in warehouse product picking and training,” Kearney predicts, “although it will likely expand from early adopters to other competitors in those areas.”

4) 5G and the Industrial Internet of Things: Companies can use the new 5G wireless standards in three key ways:

  • End-to-end visibility. 5G will enable companies to deploy many more devices, creating an Industrial Internet of Things (IIoT) that can provide real-time data for container-, truck-, and SKU-level tracking.
  • Enhanced routes and schedules. Better tracking will help organizations avoid delays, eliminate unnecessary trips, and optimize routes and schedules in real time.
  • Improved maintenance. The 5G network will support VR and AI technologies to improve on- and off-road maintenance.

“5G networks will soon be ubiquitous,” Kearney predicts. “However, beyond the 5G-powered infrastructure on which copious devices can communicate, achieving full IIoT benefits also requires easily available low-cost devices and the emergence of standards for their communication across the network.”

5) Renewable energy: Logistics companies can benefit from renewables through savings in fuel and power, reducing emissions to meet consumer preferences, and potentially increasing delivery windows through quieter electric fleets. Kearney sees three clear innovation areas within the logistics space:

  • Electric trucks rely on battery innovations that reduce costs and charging times (for example, swappable batteries).
  • Electrified last-mile vehicles may include handcarts, tricycles, or medium-sized vans.

Green warehouses reduce carbon footprints through rooftop solar panels, smart motion sensors to reduce illumination requirements, and forklift charging in off-peak hours.

6) Blockchain: Kearney says that while blockchain’s decentralized nature and transparency can improve tracking and reduce inefficiencies in logistics, advocates often overlook the foundation of digitization needed to extract the full potential of the technology. “There are also technical issues,” it points out. For example, a smart contract won’t self-execute without connectivity at the point of delivery to log the fact that the goods were delivered.

Before blockchain can become ubiquitous in the supply chain, Kearney says there are also trust issues to work through. “Making all data in a network transparent to all users can undermine trade secrets. These and other issues surrounding blockchain in logistics are certainly solvable,” it explains. “But it may take years for the solutions—and the changes in a wider ecosystem that they require—to be ready to live up to the hype.”

Stepping up to the Plate

The COVID-19 crisis serves as a reminder of the world’s reliance on logistics to deliver regardless of circumstances. It also accentuates some of the industry’s challenges, especially in meeting increased e-commerce demand from customers. “It highlights the need for modernization and technological advances,” Kearney states.

Do you agree? Please let us know.

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

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.