Benchmarking: shipment vs. delivery

What’s the better benchmark when it comes to shipping the customer’s goods: when the order ships or when the order is delivered? According to a recent survey by the Warehousing and Education Research Council (WERC), the distribution managers themselves are not in agreement. It seems more distribution center managers measure “on-time shipment” than “on-time delivery.”

More than 900 WERC members participated in the study “DC Measures 2006,” written by Karl B. Manrodt, Ph.D., associate professor at Georgia Southern University, and Kate Vitasek, managing partner of Bellevue, WA-based consultancy Supply Chain Visions.

One reason managers may be tracking when an order ships is that it’s easier to measure, Vitasek says. “It’s much tougher to obtain reliable data on precisely when the order was delivered,” she notes. And given the respondent base of DC managers, it could be that this measure more accurately reflects their daily responsibilities.

Perhaps a larger issue, Vitasek continues, is the overall lack of consensus regarding what constitutes on-time delivery. When asked whether their customers defined on-time delivery differently from them, nearly 69% responded “yes.” How much variation could there be in the definition of “on time”? Apparently quite a lot. Nearly two-thirds (63%) of respondents said that their customers defined an on-time delivery as a delivery on the requested or agreed-upon day. But others were more exacting. Nearly 27% of the respondents said that “on time” meant delivery at an appointed time, or at least within a 30-minute window of that appointed time. Still others reported different definitions, such as “by 4:00 p.m.” This lack of agreed-upon standards and definitions could explain why some suppliers have difficulty delivering “on time.”