Delivery reliability means that output is delivered on time. On-time delivery is a
commonly used operational measure of reliability. To measure on-time delivery, a firm
sets delivery dates and then finds on-time delivery performance by dividing the orders
delivered on time by the total number of orders delivered. The goal, of course, is to
achieve a ratio of 100 percent. However, this measure used by itself may produce undesirable
behavioral consequences.5 Specifically, plant managers were giving priority to
filling orders not yet late over orders that were already late. The performance measure
was encouraging managers to have one very late shipment rather than several moderately
late shipments! A chart measuring the age of late deliveries could help mitigate
this problem. Exhibit 13-7 summarizes the objectives and measures for the customer
perspective