Mastering DIFOT and SIFOT: Elevating Your Customer Experience

The ability to deliver on promises is what sets successful companies apart. Metrics like DIFOT (Delivery In Full, On Time) and SIFOT (Shipped In Full, On Time) aren’t just numbers—they’re indicators of your commitment to your customers. These key supply chain metrics will transform your customer experience, reduce stockouts, and streamline your operations.

Let’s dive in.

Understanding DIFOT and SIFOT

DIFOT (Delivery In Full, On Time) measures the percentage of orders delivered exactly as promised, both in quantity and delivery date. It reflects your ability to meet customer expectations.

SIFOT (Shipped In Full, On Time) tracks the percentage of orders shipped as planned, considering both the quantity and the shipping date. This metric focuses on your internal processes and their alignment with customer requirements.

Why DIFOT and SIFOT Matters

1. Enhancing Customer Experience

   • Your customers expect reliability. High DIFOT and SIFOT scores mean you consistently deliver on your promises, building trust and loyalty. When customers have a positive experience, they are more likely to return and recommend your business to others. Boasting a high customer experience can lead to increased business, stronger relationships, and a competitive edge in the market.

2. Preventing Customer Stockouts

   • Stockouts are a nightmare for customers and businesses alike. When customers cannot find the products they need, they turn to competitors, resulting in lost sales and potential long-term customers. By maintaining high DIFOT and SIFOT rates, you ensure products are available when customers need them, reducing lost sales and enhancing customer satisfaction. 

3. Operational Efficiency

   • Monitoring DIFOT and SIFOT highlights inefficiencies and bottlenecks in your supply chain. This insight enables you to refine processes, cut costs, and optimize inventory management. Efficient operations mean fewer delays, lower costs, and better use of resources, ultimately leading to a more resilient and responsive supply chain. 

4. Supply Chain Visibility

   • These metrics provide a clear view of your supply chain’s health. They reveal where delays occur, whether in manufacturing, warehousing, or transportation. With this visibility, you can make informed decisions and address issues proactively. Enhanced visibility also fosters collaboration among different parts of the supply chain, ensuring everyone is aligned and working towards the same goals. 

Calculating DIFOT and SIFOT

DIFOT (Delivery In Full, On Time) 

DIFOT is a combination of ensuring that deliveries are both “On Time” and “In Full.”

On Time Calculation for DIFOT:

DIFOT (On Time)=(Number of Orders Delivered On Time / Total Number of Orders)×100

• Requested Delivery Date: The date the customer expects the order. It’s the benchmark for your delivery promise.
• Actual Delivery Date: The date the order is actually delivered. For an order to be “On Time,” the Actual Delivery Date must match the Requested Delivery Date.

In Full Calculation for DIFOT:

DIFOT (In Full)=(Number of Orders Delivered In Full / Total Number of Orders)×100

• In Full: Ensure the quantity delivered matches the quantity ordered. Any shortfall in volume disqualifies the delivery from being considered “In Full.”

Combining both On Time and In Full calculations gives…

DIFOT:

DIFOT=(Number of Orders Delivered In Full and On Time / Total Number of Orders)×100

SIFOT (Shipped In Full, On Time)

SIFOT is also a combination of ensuring that shipments are both “On Time” and “In Full.”

On Time Calculation for SIFOT:

SIFOT (On Time)=(Number of Orders Shipped On Time / Total Number of Orders)×100

• Planned PGI Date: The scheduled date for the order to leave your warehouse. This date is set based on your internal planning.
• Actual PGI Date: The actual date the order leaves your warehouse. For an order to be “On Time,” the Actual PGI Date must match the Planned PGI Date.

In Full Calculation for SIFOT: SIFOT (In Full)=(Number of Orders Shipped In Full / Total Number of Orders)×100

• In Full: Ensure the quantity shipped matches the quantity ordered. Any shortfall in volume disqualifies the shipment from being considered “In Full.”

Combining both On Time and In Full calculations gives the overall…

SIFOT:

SIFOT=(Number of Orders Shipped In Full and On Time / Total Number of Orders)×100

The Role of Grace Periods

Grace periods might seem like a reasonable way to account for minor delays, but they can distort the true measure of customer experience. The fundamental goal of DIFOT and SIFOT metrics is to reflect the customer’s perspective. Using grace periods may create a false sense of achievement within your organization while ignoring the actual customer experience.

Why Avoid Grace Periods?

• Customer Expectations: If a customer is promised two-day shipping, they expect to receive their order in two days. Delivering in three days but considering it “on time” because of a grace period is misleading. It breaks the trust and undermines the customer experience.
• Perception of Reliability: Consistently meeting promised delivery dates without grace periods builds a perception of reliability. This reliability is crucial for customer loyalty and competitive advantage.
• Transparency: Accurate and transparent metrics provide a clear picture of performance. This clarity helps in identifying areas for improvement and fostering a culture of accountability.

Example: Amazon’s Two-Day Shipping 

Imagine you order a product from Amazon with a two-day shipping guarantee. Here is a walkthrough of how you could calculate DIFOT and DIFOT

SIFOT Example

• Planned PGI Date: June 29
• Actual PGI Date: June 29

In this scenario, the shipment leaves the warehouse as planned, achieving SIFOT. Therefore, the internal processes are working well in terms of shipping as scheduled.

DIFOT Example

• Requested Delivery Date: July 1
• Actual Delivery Date: July 3

Here, the delivery is clearly late. Despite the shipment leaving on time, there was delay somewhere in the delivery process. As a result, you would take a hit to your DIFOT score. This would provide a signal to investigate the root cause for the delivery to be late. This would be an excellent time to work with your Logistics’ team to understand their process and possible root causes.

Remember, this metric is a measure of the process, not the people. The goal is to identify gaps and improve your customer experience.

Conclusion

DIFOT and SIFOT are more than just metrics—they’re tools to gauge and enhance your supply chain performance. By accurately measuring these metrics without relying on grace periods, you align your operations with customer expectations, improve efficiency, and build trust. In other words, mastering these metrics helps you deliver on your promises, keep customers happy, and stay ahead in a competitive market. Remember, a late shipment is a late shipment. Aim to meet customer expectations consistently and watch your business thrive.