OTIF Compliance: Meeting Retailer On-Time In-Full Requirements

OTIF—On-Time In-Full—is the retail industry metric that measures whether suppliers deliver the right quantity on or before the retailer's specified delivery date. “On-Time” means arriving at the distribution center by the Must Arrive By Date (MABD). “In-Full” means delivering 100% of what was ordered. If you are new to retail distribution, OTIF is likely the first compliance metric you will encounter, and it is the single most expensive one to fail.

In practice, maintaining OTIF compliance above the thresholds set by major retailers requires operational precision across inventory management, ship scheduling, carrier selection, and process engineering.

Walmart's 98% OTIF threshold with a 3% COGS penalty gets the most attention, but virtually every major retailer enforces some version of OTIF. The thresholds and penalty structures vary, but the operational discipline required is consistent: you need accurate inventory, you need to ship on schedule, and you need carriers that deliver reliably. See our Walmart OTIF guide for the Walmart-specific playbook.

We ship into 60+ retailers for multiple brands, and OTIF is the compliance metric we monitor most closely because it has the most direct financial impact. This guide covers the operational approach that keeps brands above their OTIF thresholds consistently.

Understanding the Two Components

On-Time: It Starts with the MABD

The on-time component is measured against the Must Arrive By Date (MABD) on the purchase order. This is not a “ship by” date—it is an “arrive by” date. The shipment must check in at the retailer's distribution center on or before the MABD. Everything about on-time compliance flows backward from this date.

The operational discipline is calculating the correct ship date by subtracting carrier transit time and a buffer for variability. If the MABD is Friday and transit time is 2 days with 1 day of buffer, the shipment must leave the facility by Tuesday. That Tuesday ship date becomes the trigger for the pick wave, which means the inventory must be available and allocated before Tuesday.

Where this breaks down is when the buffer is insufficient (carrier delays push arrival past the MABD), when the ship date is treated as a target rather than a deadline (the pick wave starts on Tuesday instead of completing by Tuesday), or when appointment scheduling delays prevent the DC from receiving the shipment within the MABD window.

In-Full: Inventory is the Foundation

The in-full component measures whether the correct quantity was delivered at the PO line level. A line item is either in-full or it is not—there is no partial credit. Shipping 498 of 500 units fails the in-full check for that line.

In-full failures almost always trace back to inventory problems rather than pick errors:

• Inventory discrepancies. WMS counts do not match physical inventory. A PO is accepted against phantom stock that does not exist on the shelf.
• Channel allocation conflicts. The same inventory serves DTC and retail channels without reservation. A DTC order surge consumes stock intended for an open retail PO.
• Receiving delays. Inbound inventory arrives but is not processed into WMS fast enough to be available for an open PO.
• Damage and QC holds. Units that were counted as available are pulled from inventory during quality checks or found damaged during picking.

The Five Operational Levers for OTIF

1. Inventory Reservation at PO Acknowledgment

The moment a retail PO is received and acknowledged, reserve the required inventory in the WMS. This means the stock earmarked for that retailer's order is protected from DTC allocation, other retail orders, or any other demand. If the required quantity is not available at acknowledgment time, the shortfall is identified immediately—not at pick time when it is too late to procure additional stock.

2. MABD-Driven Ship Scheduling

Calculate the ship date from the MABD, not as a separate deadline. MABD minus transit time minus buffer equals the ship date. The ship date triggers the pick wave. This backward calculation ensures that every shipment is scheduled with enough time to reach the DC within the delivery window. Adjust transit buffers by lane based on historical carrier performance data.

3. Carrier Performance Tracking by Lane

Aggregate carrier on-time performance numbers hide lane-level variability. A carrier that averages 95% on-time across all lanes may be 99% on some lanes and 88% on others. The lanes with low reliability need larger transit buffers—or a different carrier. Tracking performance by lane identifies reliability problems before they accumulate into OTIF failures.

4. Pre-Shipment Quantity Validation

Before a shipment is confirmed as complete, validate that the quantity packed matches the PO line quantities. If there is a discrepancy—short pick, damaged units, inventory that could not be located—flag it before the shipment leaves the facility. A known shortfall can sometimes be communicated to the retailer through the PO acknowledgment process. An undiscovered shortfall generates an in-full failure.

5. Weekly OTIF Review and Root Cause Analysis

Review OTIF performance weekly, not monthly. Monthly reviews mean 4 weeks of potential recurring failures before the pattern is identified. Weekly reviews catch trends early. Every OTIF failure should trigger root cause analysis: Was it a transit delay? An inventory issue? A pick error? A carrier problem? Feed the root cause data back into process improvements so that each failure mode is addressed permanently.

We are hitting all the SLAs over and over again. Productiv has led the charge and brought so many improvements to the table over the last two years. There's nothing glaring that stands out anymore and now we are just fine tuning.

OTIF During Peak Seasons

Peak seasons create OTIF pressure from both sides. Outbound volume increases, which means more shipments to manage and more opportunities for errors. Simultaneously, retailer DCs are operating at higher capacity, which can narrow delivery windows and create appointment scheduling constraints.

Retailers do not relax OTIF thresholds during peak seasons. If anything, compliance is monitored more closely because the stakes are higher—out-of-stocks during peak selling seasons cost the retailer lost revenue. Managing OTIF through peaks requires advance planning: securing carrier capacity early, building inventory buffers, scheduling shipments with extra transit margin, and ensuring that surge labor is trained on compliance procedures.

The Geographic Advantage

Geographic positioning is a structural advantage for OTIF that no amount of operational excellence can fully substitute. A shipment from a facility 300 miles from the retailer's DC has inherently more margin for error than one shipping 1,500 miles. Shorter transit means less exposure to carrier delays, weather disruptions, and equipment failures.

We have helped clients reduce shipping zones from 6–8 down to 1–3 by using facilities positioned closer to their retailer DCs. The improvement is measurable in both OTIF rates and freight costs—shorter zones mean faster transit and lower transportation expense simultaneously.

I have direct access to the key decision-makers, Paul and Doug, and they make decisions quickly. There's not a lot of hierarchy in the organization, so if we need something done, a 10-minute phone call is all it takes.

OTIF compliance is an ongoing operational discipline, not a one-time setup. The retailers that enforce it are measuring every shipment, every month. If your OTIF rates are not where they need to be, start a conversation with our team. We can assess your current compliance posture and identify the specific operational changes that will move your numbers.