Cleo puts annual North American OTIF costs at $100 billion

By Marcus Bennett

OTIF failures impose an estimated $100 billion in annual economic impact on North American consumer packaged goods and food-and-beverage manufacturers, according to Cleo.

Cleo, a Chicago-based supply chain orchestration solution provider, issued the estimate in “The $100 Billion Supply Chain Penalty: OTIF’s Total Economic Impact.” The release provides no sample size, measurement period, sector breakdown or calculation method.

It also identifies no transport mode, trade lane, carrier, port, TEU, tonnage or freight rate. As a result, the $100 billion cannot be translated into a $/FEU, truckload or container-level result, and the study offers no operator-level allocation.

What drives the $100 billion estimate?

OTIF stands for On-Time, In-Full. Cleo attributes roughly 90% of the estimated impact to four indirect-cost categories, implying about $90 billion a year through those channels alone:

• Lost sales
• Reduced shelf presence
• Excess inventory
• Manufacturing inefficiencies

Those categories extend beyond retailer deductions. Lost sales and reduced shelf presence affect commercial returns, while excess inventory and manufacturing inefficiencies indicate a wider operating burden after a missed delivery.

Cleo calls the underlying problem a management blind spot. Companies track retailer deductions and delivery metrics, but often leave the broader consequences of OTIF failures disconnected from executive decisions, according to the report.

Cleo President and CEO Mahesh Rajasekharan said: “A missed delivery can cost a manufacturer its next order, its shelf space, and ultimately its standing with a retailer. The chargeback captures only a fraction of that damage.”

For shippers in the CPG and food-and-beverage sector, the immediate stakes are an order, shelf presence and retailer standing, not merely a chargeback. Cleo does not state the company count or delivery count behind the estimate.

What happens to carriers and forwarders?

Cleo identifies three operating conditions that can strain production and logistics capacity: inaccurate demand forecasts, late purchase-order transmission and promotional spikes.

For carriers and forwarders, those conditions point indirectly to capacity pressure. The source does not analyze either group directly, quantify that pressure, identify a carrier or assign either group a share of the $100 billion.

The report also mentions no ocean or road capacity, port congestion, rate index or lane-level disruption. Any claim about a modal rate or named operator would therefore exceed the evidence in this release.

What can companies change?

Cleo recommends five broad responses, but attaches no cost, timetable, adoption rate or estimated recovery to any:

• Tactical compliance management
• Logistics technology
• Supply chain intelligence
• Retailer collaboration
• Supply chain orchestration

The list spans compliance, technology, intelligence, collaboration and orchestration. It does not rank the options, provide implementation details or show how much of the estimated $100 billion each could recover.

That omission matters because Cleo classifies nine in every 10 dollars of its estimate as indirect. The release does not explain how companies would connect each chargeback to the wider commercial effect described in the report.

Rajasekharan’s proposed organizational remedy is shared executive ownership. He said: “CEOs need to make OTIF a shared business priority, with clear ownership of its full financial impact.”

If Cleo’s diagnosis holds, the trajectory points toward more executive accountability for OTIF and closer coordination among planning, order management, manufacturing and transportation. The release provides no capacity forecast, rate projection or policy timetable against which to test that promise.