Page 11 - Logistics News - March_April 2022

O P I N ION

chain metric. OTIF is not a new concept — in a survey addressing the root causes of the problem, many of
by Zipline Logistics, 100 percent of retail buyers said which occur at the manufacturing level. If materials are
that timeliness impacts their willingness to work with a not properly managed — if ingredients or components
particular vendor. Nearly three-quarters have gone as far cannot be easily traced or stocked — manufacturers will
as ending a vendor relationship due to delivery issues. struggle to fulfil their OTIF obligations with any retailer.
But Walmart’s OTIF requirements are quite significant.
The retailer expects shipments to be 98 percent filled on Businesses can overcome these challenges by relying
time, and if a supplier fails to comply, it may receive a fee on data-driven ERP technology that allows them to
equal to three percent of the cost of goods. better manage their processes. They need forecasting,
supply and demand, and warehouse management tools
As challenging as this sounds, the demands are they can count on to deliver a clear picture of their
not impossible to meet. By using the right enterprise operations at all times.
resource planning technology, organisations can stay
on top of retailers’ growing demands and improve their Embracing one truth
OTIF performance. OTIF is a challenging metric to hit month after month,
so manufacturers need to be able to clearly communicate
Solving OTIF challenges with warehouses and transportation partners to
Walmart’s three percent fee for noncompliance is ensure they have the capacity to meet their needs.
nothing to sneer at — for a larger firm, this could result Manufacturers also want to know that their deliveries
in a six-figure penalty, cutting into the bottom line. With will be made on schedule.
inflationary pressures encroaching on revenue goals,
businesses are repeatedly faced with a difficult dilemma: They can certainly improve their situation by
endure lower profits or pass the cost onto consumers. working with a diverse selection of carriers, shopping
Manufacturers simply cannot afford to let additional around not only for the best rate but for the highest level
expenditures reduce their earnings. of reliability. Order tracking is also critical — without
real-time visibility into where orders are and when
Like it or not, supply chain struggles continue to they’ll arrive, manufacturers will struggle to keep up.
plague retailers and consumers, who may not be able
to get the products they want, when they want them. But not all technologies are created equal.
Some retailers have responded to these issues by Manufacturers that juggle independent software
reimplementing item limits, but that is a temporary systems to run their business expose themselves
stopgap that does not in any way solve the overall to vulnerabilities around accuracy and speed. What
problem. They may also look to implement stricter OTIF manufacturers need is a single source of truth with all
policies to nudge suppliers along. data in one place — a technology that alleviates the
challenges they face from OTIF or any other metric or
This may sound unreasonable, but manufacturers expectation.
need to find a way forward. The solution is not in 24-
hour operations, which is not realistic or sustainable Supply chain pressures will hopefully ease in the
long-term, nor can it be solved by hiring more drivers. coming year, but the volatility — caused by specific
With an ongoing shortage of talent, supply chains can’t shortages, unanticipated demand or a black swan event
hire their way to victory — and even if they could, — will likely remain. Manufacturers cannot wait for
delivery problems would persist. things to get better on their own, nor should they ignore
the expectations set forth by the world’s largest retailers.
In addressing any challenges put forth by retailers To keep up with their demand — and in turn, consumer L O GI S T I CS NEWS
enforcing strict OTIF metrics, manufacturers must demand — manufacturers need ERP technology that
consider more than the shipping process. The reality is was designed to help them overcome their challenges
that supply chains cannot deliver OTIF without first and build the best supply chain possible. •

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