Operations
Service level (fill rate and OTIF)
How reliably a supplier delivers what was ordered, measured by fill rate and on time in full.
Last reviewedWhat does Service level (fill rate and OTIF) mean?
Service level is how well a supply chain meets customer demand. Two common measures are used. Fill rate is the share of ordered units (or order lines) delivered from stock. OTIF (on time, in full) is the share of orders delivered complete on the promised date. Example: a retailer places 100 orders for 1,000 units in total. The supplier ships 960 units, so the unit fill rate is 96 percent, but only 85 of the 100 orders arrive both complete and on time, so OTIF is 85 percent. Large retailers often fine suppliers who miss OTIF targets. A higher service level usually needs more safety stock, so there is a trade-off with inventory cost. In advertising, fill rate has a different meaning.
Where does it come up in case interview prep?
Related terms
- Safety stockExtra inventory held to protect against demand spikes or late deliveries.
- Lead timeThe time from placing an order to receiving it.
- Fill rate (advertising)The share of available ad slots that are actually sold and shown.
- Inventory turnoverHow many times stock is sold and replaced in a year.
- BottleneckThe slowest step, which limits the output of the whole process.
- Capacity utilizationActual output as a share of the most that could be produced.
- Little's lawItems in a system = arrival rate × time each item spends in it.
- Landed costThe full cost of getting a product to your door, not just its purchase price.