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. This measure used by itself may produce
undesirable behavioral consequences. Specifically, plant managers may give priority
to filling orders not yet late over orders that are already late. The performance
meas
ure can encourage 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 16-15 summarizes the objectives and measures for
the customer perspective.