Organizations use Six Sigma methodologies for any number of reasons. However, most methods are used primarily to improve business processes. These improvements come in the form of increasing efficiency, decreasing production delays, and most importantly, deterring manufacturing defects. Yet, Six Sigma is just relevant outside your organization as it is from within. For every company, customers are the center of most goals. Why you decide to make certain products or offer specific services is based on the demand from your customers. In other words, your customers influence how you operate your organization.
What is DIFOT?
When providing a product or service to you customers, the delivery time estimation is critical. Some customers may depend on your product deliveries to restock their shelves, influence their own operational processes, or manage their supply chains. Because of this, it’s important that your organization calculates and understands its Delivery in full, on time (DIFOT) rate. Your DIFOT rate answers the questions “Are your customers receiving the products or service they requested when they want them?”. Of course, there are multiple factors that can influence or delay a delivery. Yet, your customer will look to you when their product is late, missing, or damaged.
Six Sigma and DIFOT
As a process improvement methodology, Six Sigma commonly uses Lean and DMAIC methods to deter hindrances to production. Whether this includes cutting down on waste or increasing production speed, the main objective is constant improvement. Like how you search for the root cause of a production defect, it’s important to find what causes delays in delivery of your products. The source may not always be directly within your control, i.e. a courier service or third-party delivery service. Yet, it’s still critical to consider what causes your products to arrive either on time or late to your customers. To look into this, you need a variety of Six Sigma professionals. Specifically, Green Belts and Black Belts.
Calculating your DIFOT
When calculating your DIFOT, you must collect raw data on your products and their shipments. The exact formula for DIFOT is the units delivered in full, on time divided by the total number of units that you shipped. In the end, you will receive a ratio. For most successful organization, this ratio should not be less than 95%. While this formula may be simple, collecting the data can be more challenging.
First, you must be able to track your orders either in person or by an automated system. In either case, Six Sigma Green Belts will be responsible for collecting and organizing the data. Because Green Belts do not manage projects, they must provide their managers, Black Belts with the appropriate data. Once collected, Black Belts can analyze the data and see where delivery inefficiencies may be. Solutions for these inefficiencies depend on the source of the problem. If you notice that all your products are shipped on time but arrive late, maybe you should hire a new courier service. Likewise, if you are not shipping your products on time, you might need to reevaluate specific manufacturing processes.
DIFOT is an easy to use key performance indicator that not only puts your customers at the center of your attention, but also shows where you can improve delivery processes.