This article originally appeared in My Logistics Magazine
One of the key metrics in a supply chain is DIFOT which stands for Delivery In Full On Time. For many it is the most important KPI and is oftentimes the only ones the receiver of goods really cares about.
DIFOT is typically judged against the carrier’s promised delivery schedule. This can be as specific as a time of day or as general as week. Most often it is day definite, meaning that delivery is expected on Wednesday.
The carrier’s delivery schedule may be smart enough to take into account vagaries such as day of despatch, weekend hold ups and sporadic inter-city line haul, but most often is based around an expectation that delivery between the sender and receiver towns is usually “X” days. Build in a fudge factor, and a delivery expectation is reached.
DIFOT is normally expressed as a percentage. A DIFOT of 88% means that 88 out of every 100 deliveries was accomplished on time and in full.
Depending on your relationship with your carrier or your own IT capabilities you should, on a regular basis be analysing DIFOT. Part of your Service Level Agreement with your freight carrier may be a specific DIFOT level as a minimum.
Be careful when accepting the carrier’s own DIFOT data. Due to the magic of “force majeure” (technically “force of nature” or “act of god”, but in freight terms “not my fault”),transport companies will alter the actual DIFOT to become their “real” DIFOT. In some cases this may be justified. A cyclone or a major international conference can cause freight delays outside of the control of the carrier. However many carriers will include such items as “line haul breakdown” or “driver ran out of time”! These are not acts of god, these are symptoms of poor management.
Whenever using a carrier’s own DIFOT report as the basis for your decision making always be sure to demand the raw data as well.
Once you have the DIFOT report you need to drill down through the figures. A poor DIFOT can be caused by a range of issues such as:
– genuine carrier failures
– incorrect assumptions in the established transit times
– receiver issues such as closing hours or refusals
There is almost always a pattern to DIFOT. A good rule of thumb is that one delivery issue to a customer is most likely human error whilst two delivery issues to the same customer is a systemic problem that can be fixed and prevented. Get to know your DIFOT, learn where the carrier is strong and learn which customers are causing you trouble.
When working with your transport company to fix a low DIFOT be specific. It is far more productive to meet with a carrier about the late deliveries on specific days to specific customers for specific order sizes than to call them up, blast them for a low percentage and expect them to fix it.
Whilst a low DIFOT is obviously a problem, a high DIFOT can also be a problem. For starters, it may be inaccurate. This is why we are checking the raw data. Other false causes of high DIFOT can include:
– a carrier knowingly setting the bar low for service
– unintentional erroneous data
– deliberate falsifying of delivery data
A random sample of data should be able to tell you if this is occurring, but feedback from your customers and your own staff will also give you an idea there is something amiss. For example, a large number of inbound queries asking for estimated delivery dates might suggest that the receiver lacks faith in the carrier’s ability to deliver on time. If the customers don’t believe the freight is going to be delivered on time, but there is a high DIFOT, something doesn’t add up.
A high DIFOT can also be a problem if the missed deliveries are to the same customer all the time, or the same customer group. Again, drilling down into the data will enlighten you and make it a manageable situation.
In summary, DIFOT is important but is much more than just a percentage in a report or a sexy pie graph. As a freight manager, you need to work with this data to ensure the outcomes being achieved are those you require.