In Part 1, we looked at why buyers are now formally scoring manufacturers on OTIF, On Time In Full, and why a business can believe its delivery performance is fine while still failing the metric on paper. This part gets into the actual math, and where that number typically breaks down inside a manufacturing operation.
The OTIF Formula
The formula counts orders at the order level, not as two separate averages multiplied together. For each order, you ask a single question: did it arrive on time, and did it arrive complete? If either answer is no, that order counts as a failure, full stop.
The formula looks like this:
This is different from calculating on-time delivery and in-full delivery as two independent percentages and assuming OTIF sits somewhere between them. It doesn’t work that way. An order that’s late by one day and short by ten units still counts as a single failed order, exactly the same as an order that missed both by a wide margin. The formula doesn’t care about degree, only about whether both conditions held true.
A Worked Example
Say a bag manufacturer ships five orders in a month.
| Order | Quantity | On Time | In Full | Result |
|---|---|---|---|---|
| Order 1 | 500 units | ✅ | ✅ | ✅ Success |
| Order 2 | 800 units | ❌ (2 days late) | ✅ | ❌ Failure |
| Order 3 | 1,200 units | ✅ | ❌ (100 short) | ❌ Failure |
| Order 4 | 600 units | ✅ | ✅ | ✅ Success |
| Order 5 | 900 units | ❌ (1 day late) | ❌ (50 short) | ❌ Failure |
Out of five orders, only two met both conditions. That puts OTIF at 40%.
Now compare that to the two metrics most businesses actually track. On-time delivery alone, looking only at whether the order arrived by the promised date, comes out to 60% (Orders 1, 3, and 4 were on time). In-full delivery alone, looking only at whether the full quantity shipped, also comes out to 60% (Orders 1, 2, and 4 shipped complete). Both individual numbers look reasonably close to acceptable. The combined OTIF number, however, drops to 40%, because Orders 2 and 3 fail on different conditions and neither overlaps with the other’s success. This is exactly the gap we flagged in Part 1: track the two halves separately and the business looks fine. Track them together, the way a buyer’s scorecard does, and the real number is considerably worse.
How ERPNext Can Take Care Of Your OTIF Score Easily
Most of the OTIF failures we see in manufacturing operations don’t come from a single dramatic mistake. They come from gaps in how orders and deliveries get recorded in the first place. A dispatch that goes out on a manual challan instead of a system entry. A partial shipment that never gets logged as partial. An order confirmed over a phone call or WhatsApp message that never makes it into the system as a formal Sales Order. Every one of these gaps makes it harder to know your real OTIF number, and harder to fix it.
This is why, in ERPNext, creating a Sales Order for every order and a Delivery Note for every dispatch shouldn’t be optional. It should be mandatory, regardless of how small the business is or how informal the order came in. A Sales Order captures the promised delivery date and quantity the moment the commitment happens, before anything ships. A Delivery Note captures exactly what went out and when, and links back to that same Sales Order line by line. Without both of these existing consistently, for every order, there’s no reliable way to calculate OTIF at all, let alone improve it.
What Mandatory Sales Orders and Delivery Notes Actually Fix
Making this mandatory closes the two most common gaps that cause OTIF failures in the first place. It stops split shipments from going unrecorded, since every partial delivery creates its own Delivery Note tied to the original order, making shortfalls visible instead of quietly resolving them off the books. It also stops delivery dates from becoming informal or negotiable after the fact, since the Sales Order locks in the promised date from the start, and nobody adjusts it retroactively to match whatever actually happened.
None of this guarantees a perfect score on its own. Production delays, quality issues, and capacity constraints will still happen. What mandatory Sales Orders and Delivery Notes do is make sure that when something does go wrong, it shows up in the number immediately, instead of surfacing weeks later when a buyer’s scorecard reveals a problem the business didn’t know it had.
Where OTIF Actually Breaks Down
Knowing the formula only gets you halfway. The more useful question is where, inside the operation, orders actually slip from success to failure. In most manufacturing setups, it comes down to a handful of recurring points.
Inaccurate BOMs
When a Bill of Materials doesn’t reflect what the shop floor actually uses, production planning works off bad numbers from the start.
- A missing process step throws off the production timeline before work even begins
- Outdated quantities lead to material shortages that surface mid-production, not before
- Unaccounted wastage means the plan runs out of material before the order is complete
- In ERPNext, this traces directly back to the BOM doctype, and it’s often the root cause of delays that look like a scheduling problem but are actually a data accuracy problem
Poor Production Scheduling
Even with an accurate BOM, an order can fall behind if capacity planning doesn’t account for what’s actually running on the floor.
- Planners commit to a delivery date without first checking workstation load
- Multiple orders compete for the same stitching or finishing line with no sequencing plan
- A delay on one order often goes unnoticed too long to adjust the orders behind it
- ERPNext’s Production Plan and Job Card give visibility into all of this, but only when the team actually uses them to plan ahead, rather than reacting to a sales order after it’s already overdue
Stock Reservation Gaps
A common cause of short shipments is inventory that looks available in the system but isn’t actually free to allocate.
- A different sales order ties up the stock, but nobody marks it as reserved
- Inventory sits in a location or bin the system doesn’t reflect correctly
- Packing staff allocate stock manually at dispatch time instead of at order confirmation
- ERPNext’s stock reservation against Sales Order closes this gap, but only when the team reserves stock consistently the moment they confirm an order
Delivery And Dispatch Scheduling
Production can finish on time and an order can still ship late if dispatch scheduling doesn’t line up with production completion.
- Finished goods sit in the warehouse waiting for a transporter slot nobody booked in advance
- Dispatch planning happens reactively, after production notifies the warehouse, instead of on a shared schedule
- Multiple orders finish at once and compete for the same limited dispatch capacity
- This is frequently the easiest of the five causes to fix, since it’s a coordination issue rather than a manufacturing one, once it’s actually visible through Delivery Note scheduling
Quality Holds Caught Too Late
When inspection catches a quality issue right before dispatch instead of earlier in the process, there’s no time left to correct it without missing the delivery date.
- Inspection only happens at the final stock entry, right before goods leave
- A defect discovered at this stage means rework, which almost always pushes the delivery date
- Earlier inspection points in the process go unused even when they exist
- ERPNext’s Quality Inspection, triggered earlier in the workflow rather than only at the final stage, gives a business the chance to catch and fix a problem while there’s still room to hit the delivery window
Each of these causes shows up as a different kind of OTIF failure, some hit the “on time” side, some hit the “in full” side, and some hit both at once, the way Order 5 did in the example above. Tracking OTIF more closely after the fact doesn’t fix any of them. Fixing them takes visibility into production, inventory, and dispatch while there’s still time to act, which is exactly the problem with how most manufacturers track this number today. That’s what Part 3 gets into.
At CitrusLeaf, we don’t just implement ERP systems, we provide best practices to ensure that you make full advantage of the ERP system and make your business perform better. Reach out to us today on hello@citrusleaf.in
