Procurement Glossary
Supply capability: definition, evaluation and strategic importance in Procurement
November 19, 2025
Supply capability refers to a supplier's ability to deliver ordered goods or services on time, in the desired quality and quantity. This key figure is a decisive factor for security of supply and has a significant influence on production planning and customer satisfaction. Find out below what delivery capability means exactly, what methods exist for evaluating it and how you can successfully minimize delivery risks.
Key Facts
- Delivery capability is usually measured as the percentage of orders delivered on time
- Typical target values are between 95-99% depending on industry and criticality
- Includes both quantitative aspects (quantity, deadline) and qualitative factors
- Direct impact on stock levels, production costs and customer satisfaction
- Central component in supplier evaluation and selection
Contents
Definition: Delivery capability
Supply capability describes the reliability of a supplier in fulfilling delivery obligations and is a central component of supply chain resilience.
Key aspects of delivery capability
Delivery capability is assessed on the basis of several dimensions:
- Adherence to deadlines: meeting agreed delivery dates
- Quantity reliability: delivery of the exact quantities ordered
- Quality compliance: fulfillment of the specified quality requirements
- Availability: Continuous provision of the required materials
Ability to deliver vs. readiness to deliver
While ability to deliver measures actual performance, readiness to deliver describes the basic capacity and willingness to deliver. The supplier suitability test takes both aspects into account.
Importance of delivery capability in Procurement
A high delivery capability reduces procurement risks and enables lean warehousing. It is crucial for demand planning and has a direct impact on the company's competitiveness.
Methods and procedures for delivery capability
The systematic evaluation and improvement of delivery capability requires structured approaches and continuous monitoring of supplier performance.
Measurement and key figures
Delivery capability is typically measured using the following metrics:
- On-Time Delivery Rate (OTDR): Percentage of on-time deliveries
- Perfect Order Rate: percentage of error-free orders (date, quantity, quality)
- Fill rate: ratio of delivered to ordered quantity
Supplier evaluation and development
Regular assessments of supplier performance form the basis for improvement measures. Benchmarking processes help to identify best practices and define performance standards.
Preventive measures
Various strategies are used to ensure high delivery capability. Dual sourcing reduces dependencies, while strategic stockpiling cushions supply bottlenecks.
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Important KPIs for delivery capability
Delivery capability is systematically measured using defined key figures that enable continuous monitoring and improvement.
Primary performance indicators
Central KPIs for evaluating delivery capability include:
- On-time delivery rate (OTDR): Target value 95-99%
- Perfect Order Rate: Complete and error-free deliveries
- Supplier Delivery Performance: Overall assessment of supplier performance
- Lead time variability: fluctuations in delivery times
Secondary measured variables
Supplementary key figures provide deeper insights into supplier performance. The capital commitment period shows the financial impact of delivery delays.
Reporting and monitoring
Regular evaluations and trend analyses support strategic decisions. Deviation analyses identify potential for improvement and enable targeted measures to increase performance.
Risks, dependencies and countermeasures
Insufficient delivery capability can have serious consequences for companies and requires systematic risk management to limit damage.
Operational risks
Delivery failures lead to production downtimes, increased storage costs and customer dissatisfaction. Effective missing parts management minimizes these effects through fast response times and alternative procurement channels.
Strategic dependencies
Excessive concentration on a small number of suppliers significantly increases supply risks. Although single sourcing can offer cost benefits, it harbors high risks in the event of delivery failures.
Preventive countermeasures
Diversified supplier portfolios and robust contract design sustainably reduce risks. Supply base optimization creates the optimal balance between efficiency and security, while alternative procurement strategies ensure flexibility.
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Practical example
An automotive manufacturer implements systematic delivery capability monitoring for critical components. Weekly evaluation of the OTDR and monthly supplier meetings increased on-time delivery from 92% to 98%. At the same time, unplanned production downtimes were reduced by 60%.
- Introduction of automated tracking systems for real-time monitoring
- Development of escalation processes in the event of delivery delays
- Implementation of bonus-malus systems to incentivize performance
Trends & developments relating to delivery capability
Modern technologies and changing market conditions are shaping the development of new approaches to evaluating and ensuring delivery capability.
Digitalization and predictive analytics
Artificial intelligence makes it possible to predict supply bottlenecks by analyzing historical data and external factors. AI-based systems recognize risk patterns at an early stage and suggest preventive measures.
Real-Time Supply Chain Visibility
Modern tracking technologies offer real-time insights into supply chains and enable proactive risk management. Supply chain visibility becomes a decisive competitive advantage.
Sustainable delivery capability
Environmental and social standards are increasingly influencing supplier evaluation. The Supply Chain Act strengthens the focus on sustainable and ethical procurement, which creates new dimensions of supply capability.
Conclusion
Delivery capability is a critical success factor for modern companies and requires systematic evaluation and continuous optimization. Digitalization opens up new opportunities for precise forecasting and proactive risk management. Successful companies invest in long-term supplier partnerships and diversified procurement strategies in order to sustainably strengthen their security of supply.
FAQ
What is the difference between delivery capability and delivery reliability?
Delivery capability describes the fundamental ability to deliver, while delivery reliability measures the actual adherence to deadlines, quantities and quality. Delivery reliability is therefore a sub-aspect of delivery capability and relates to historical performance.
How is the delivery capability calculated?
The most common calculation is the on-time delivery rate: (number of on-time deliveries / total number of deliveries) × 100. Advanced calculations also take into account quantity and quality reliability for a perfect order rate.
What factors influence the ability to deliver?
Internal factors include production capacity, warehousing and quality management. External factors include transportation availability, raw material prices, regulatory changes and geopolitical events. Demand planning and communication with customers also play an important role.
How can companies improve their suppliers' ability to deliver?
Through regular performance evaluations, joint improvement projects and long-term partnerships. Investments in supplier development, training and technical support pay off in the form of increased delivery capability. Fair contract conditions and timely demand notifications also promote performance.
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