On-Time In-Full (OTIF) and the Growing Demand for Real-Time Freight Visibility

Achieving end-to-end supply chain visibility has always been (and remains) a top priority for companies, but over the past few years, the spotlight has been on a particular segment of the process: achieving real-time freight visibility. Why has this become so important for shippers and third-party logistics providers (3PLs)?

“We’ve always had systems that allowed you to get visibility within your own four walls,” said Bennett Adelson, CEO of MacroPoint in a recent episode of Talking Logistics. “But where the biggest black hole has been, traditionally, is in-transit visibility. When a truck [and the orders within it] leaves my dock, where is it now? That over-the-road visibility has been the hardest problem to solve in supply chain visibility.”

However, that blind spot is going away, thanks to advancements in technology (such as mobile devices, geolocation technologies, connected carrier networks, and big data) and significantly lower costs to deploy them.

“The reason real-time freight visibility is a hot topic now is that with today’s technology it’s no longer accepted as a black hole,” said Adelson. “The market is now at the point where providing real-time visibility to your customers, whether you’re a shipper, freight broker, or 3PL, is now table stakes to be in this industry.”

The ability to provide real-time freight visibility is showing up more and more in request for proposals (RFPs) and supplier agreements. “We’ve seen a 300 percent increase [over the past 3 years] in the demand for real-time freight visibility as a hard requirement in the RFPs received by our customers,” said Adelson.

What’s driving this demand? More stringent customer delivery requirements is certainly one factor, with On-Time In-Full (OTIF) becoming a more critical metric. For example, Walmart will begin enforcing new OTIF requirements next month: As reported by Bloomberg a couple of weeks ago:

The new rules begin in August, and [Walmart] said they will require full-truckload suppliers of fast-turning items — groceries, paper towels — to “deliver what we ordered 100 percent in full, on the must-arrive-by date 75 percent of the time.” Items that are late or missing during a one-month period will incur a fine of 3 percent of their value. Early shipments get dinged, too, because they create overstocks.

By February, Wal-Mart wants these deliveries to be on-time and in-full (known as “OTIF”) 95 percent of the time. Its previous target was 90 percent hitting a more lenient four-day window.

How does freight visibility impact OTIF? Watch the short clip below where Adelson shares his perspective:

“On-Time In-Full is not just on-time that day or during that time window, but on-time with all of the services that are part of the contract,” said Adelson. “The ability to provide updates in an on-time fashion [which, as highlighted earlier, is a requirement in many RFPs] is part of it. There are multiple sub-metrics that go into OTIF, but real-time freight visibility is definitely a component of it.”

I encourage you to watch the rest of my conversation with Bennett for additional insights and advice on this topic, including the importance of “network effectiveness” when it comes to freight visibility and its impact on cost and value. Then post a question or comment and share your perspective!