On-time Supplier Delivery Rate

On-time Supplier Delivery Rate

KPI Details

On-Time Supplier Delivery Rate measures the reliability of the company's suppliers with regards to delivering shipments on-time. A relatively low value for this KPI may indicate that the company practices poor delivery scheduling methods, the company is not adequately managing or communicating with its vendors, or that they are not providing enough incentive for the supplier to consistently deliver shipments on-time. If suppliers are consistently delivering shipments late, the company may need to spend time and money searching for new vendors. On-Time Supplier Delivery Rate can be increased by specifically setting requirements in vendor contracts that define on-time deliveries and providing incentives for on-time delivery.

KPI Definition

The number of orders received from suppliers on or before the committed delivery date divided by the total number of orders received from suppliers over the same period of time, as a percentage.

KPI Best Practices

• Where possible, use regional suppliers to decrease transit time, costs and damage
• Provide suppliers with incentives to improve order timeliness
• Effective supplier shipment scheduling and receiving practices to minimize overflow of incoming deliveries

KPI Calculation Instructions On-time Supplier Delivery Rate?

Two values are used to calculate this KPI: (1) the number of orders received from suppliers on or before the committed delivery date, and (2) the total number of supplier orders received during the same measurement period. An order is considered on-time if the supplier delivers the shipment by the time that is agreed upon by the company and the supplier based on an informal agreement or an agreement that is set forth in the purchase order (PO). Do not include on-time deliveries that are only partially filled in the numerator of this calculation.

KPI Formula :

(Total Number of Orders Received from Suppliers On Time / Total Number of Orders Received from Suppliers) * 100