What is On-time Delivery?
On-time delivery is Key Performance Indicator (KPI) that helps businesses assess whether they are delivering orders to their customers within the promised time. This metric helps businesses improve and streamline their order fulfillment process to increase customer returns and purchase rates.
Significance of On-time Delivery in E-commerce Logistics
On-time delivery plays a significant role in maintaining profit margins in any company. It has several significant benefits, some of which are:
- Customer retention: Providing on-time delivery to customers builds trust and leaves customers satisfied with the services. This retains customers allowing them to make frequent purchases.
- Rising above competitors: If you maintain on-time delivery, you can stay ahead of the other competitor e-commerce businesses and build a loyal customer base.
Prerequisites for On-time Delivery and How It Works
Here are the prerequisites to execute on-time delivery:
- Identifying and analyzing reasons for late deliveries.
- Developing and executing a plan to eradicate the main causes of delays.
- Constantly monitoring the plan and revising it whenever necessary.
The formula to calculate the percentage of on-time delivery is:
(Number of deliveries made on time / Total number of deliveries) x 100
Use Case with On-time Delivery
Suppose a company has received 100 orders in a week, out of which, there were five delayed deliveries. Therefore, the number of deliveries on time would be (100-5)= 95. Consequently, the on-time delivery rate would be:
95/100 x 100 = 95%.