When you promise a delivery time, you have to take production capacity into account. That means you have planned to deliver, invoice, and collect a number of orders within the promised timeframes.
When we deliver an order late, that means that the time we had planned to spend on that order was used on another order, so at the end of the month, with several late orders, we have delivered fewer orders than we had planned. This also prevents billing and collection.
This in itself is already a reduction in budgeted sales, so achieving 100% OTIF (On Time in Full), that is, managing to deliver on time and always complete, is the same as meeting the sales plan.
Lost time is never made up again. This is the effect on present sales.
I will also remember here the consequences on future sales. Late deliveries create so many problems for our customers that sooner or later our reputation suffers.
I end this brief insight by repeating a quote I saw today:
Thankful to Jorge Arias Galeas for sharing it on LinkedIn.
Yet another reason to achieve 100% OTIF.