Order Fulfillment Cycle Time
Are the quality of your services being welcomed by your online shoppers? Even if you succeed in shipping your items on time, is there another room for improvement?
Certainly, your product meets every requirement for quality. However, in today’s market, this is insufficient to ensure customer happiness.
Numerous other online retailers have already made changes to meet the demands of customers who seek greater ease and quicker fulfillment. You can maximize the potential of your online store by optimizing your order fulfillment cycle time.
When your own online store can succeed, there’s no need to surrender to e-commerce big players.
Contents
What does Order Fulfillment Cycle Time (OFCT) mean?
The term “order fulfillment cycle time” describes the period of time between when a customer places an order and when they get it.
This is a key KPI for any company, especially for e-fulfillment which gives additional logistical difficulties than your standard orders.
Why does ORCT matter?
In terms of consumer happiness and loyalty, a company’s order fulfillment efficiency is important.
An effective operation stands out from the crowd by having a well-organized order fulfillment process that involves inventory, warehousing, organization, and shipping products.
Yet, it is not sufficient to follow timelines and send packages on time when it comes to this vital eCommerce operation.
ORCT’s importance
If a customer feels that they have had to wait too much longer for their order, they may not even feel likely to make another purchase from you.
Worse than that, they can decide to back out of the deal, costing your company significant time and resources on manufacturing. This seems unfair considering how much you depend on postal and courier services to quickly deliver your items.
Because of this, tracking order fulfillment cycle time is crucial for any scaling manufacturing company. You can decide whether it is acceptable to your buyer and how to make things better.
Even when the goods actually are of poorer quality, consumers are expected to go somewhere else if they can receive their products faster. Although it may be difficult to accept, no matter how big the company, this problem can be resolved.
It comes down to psychology: “why do consumers select a certain shop to buy at?” Emotions are the key!
For this, increasing your online sales may not be possible with just your product. For shoppers to have a purpose to shop online all the time, you also need to have value for them.
Ultimately, it is essential to recognize the order fulfillment life cycle. It has a serious influence on your company’s human resources. Being a trustworthy online merchant and earning your consumers’ trust are goals.
Quick delivery demonstrates your concern for your customers, and then good feedback and customer loyalty.
The Life Cycle of Order Fulfillment
From the time you get a customer order until the order is delivered in its whole, there are a number of processes that must be fulfilled. These steps include:
- Customers make a purchase on your online store.
- You get the order notifications through the order dashboard or email
- You make the request for the needed supplies from the manufacturer.
- The manufacturing phase begins after your staff gets the MO.
- The order has been produced, completed, and packed.
- The customer receives the shipment of the order.
When it comes to online shopping, the order fulfillment process may take days or weeks. Often factors outside of your control, such as international shipping, may have an impact. Making ensuring your average OFCT stays as low as feasible is crucial, though.
Keeping average OFCT as low as possible
OFCT in your supply chain and manufacturing operations is something you can manage. By simply making changes inside your home, how can you reduce it as much as possible?
Managing the time required for order fulfillment becomes increasingly difficult as your organization expands. This could be due to completing orders becoming contingent on numerous organizations inside your company. To finish the order fulfillment process, various departments begin to communicate.
OFCT Metrics
The order fulfillment cycle can be calculated in a variety of ways, therefore your OFCT can literally involve some metrics as follows:
Promised customer order cycle time is the estimated time for order fulfillment that you provide to your customers. You might hope that unexpected causes won’t cause orders to take longer. Also, you can shorten the order fulfillment cycle over time to reduce this.
The actual customer order cycle time is the typical period needed for the customer to get their order. This is the standard time that happens in reality. That is what you need to be attempting to minimize.
Cash to Cash cycle time is the period between the time you purchase supplies and raw materials and the time you get paid for your final products.
Cycle time for the supply chain is the time it takes to complete an order from a customer starting from you gets no raw materials. It includes the time required to purchase and get supplies as well as the cycle time for completing an order.
When assessing the order fulfillment and supply chain operations of your business, each of these methods used to measure order fulfillment has importance.
Avoid overthinking any aspect of your purchase fulfillment. It is essential to recognize and keep tabs on what is happening in your company, but not to the point where it interferes with how operations are being handled.
Calculator for Your Order Fulfillment Cycle Time
To be competitive in the online market, it’s critical to have a quick order fulfillment cycle time. Nevertheless, keeping the cycle time under control might be tricky because merchants may have little control over sourcing goods or delivery services.
The very first move in streamlining the procedure is order fulfillment cycle time calculation.
When measuring fulfillment in your company, using an order fulfillment cycle time formula can help. This calculation that is most frequently used calculates the total manufacturing and shipping time as follows:
Order fulfillment cycle time formula
The following main elements have a variety of effects on the cycle time:
Production time
This is the period of time required to produce, assemble, and pack the customer’s order.
Delivery time
This is the period of time it takes for the order to travel from your manufacturing facility and come to your customers’ hands.
Source time
This is the period of time between a customer placing an order and a store obtaining the supplies and goods needed to complete the order. This phase emphasizes how crucial it is to have dependable suppliers and a solid eCommerce platform.
Example
Let’s move to the short example!
The total order fulfillment cycle time would be four days if a consumer ordered a resin candle mold online on January 6 and received it on January 10. This cycle time includes 1 day for sourcing the necessary materials, 1 day for production, and 2 days for delivery.
In an effort to make your business operate efficiently and successfully, you should use this calculator to determine every factor of the order fulfillment cycle.
You can analyze what is going on in more depth if the real-time run is longer than planned.
Perhaps your small business operations call for a better inventory management system. Maybe not enough time in the morning is spent checking the section of your online order.
It’s possible that not everyone in your company received these guidelines clearly. When you’ve not transmitted your sales orders to your primary MRP system, you may potentially overlook e-commerce orders.
Finding out how consistently your company fulfills orders is vital once you have figured out the way of tracking this measure.
In fact, there are still numerous more KPIs that are significant for your company. An order cycle time KPI called perfect order measures achieving all of this coupled with on-time delivery. It is the goal that every online business should pursue.
How to Improve the OFCT in your business
The majority of companies think that simply meeting delivery deadlines is confirmation of an efficient order fulfillment system.
Yet, 69% of customers claim that only one bad delivery experience is enough to make them decide against making a second purchase from a particular company. Because of this, there is extremely little opportunity for error.
Order fulfillment cycle times may always be sped up, and this goes beyond only shipping issues. Businesses must consider the big view if they want an effective system.
Constantly evaluating the cycle time
Order fulfillment cycle time can vary over time, particularly if the supply chain is altered or disrupted. For instance, an unexpected delivery exception may cause the order cycle time to be significantly longer than typical.
Constantly evaluating the cycle time
Or, after deploying an automation system to enhance your warehouse receiving procedure, you can observe a significantly reduced order cycle time.
A huge volume of returns may also make it difficult for your warehouse workers to concentrate on fulfillment responsibilities because they will be too busy tracking and organizing your online returns.
There are numerous factors in your supply chain that can influence this order cycle time.
Your supply chain’s entire range of factors can have an impact on this statistic. Your order cycle time needs to be closely monitored and evaluated on a regular basis.
By doing so, you can decide whether you need to assess your supply chain procedures and make any accelerated changes. It’s an excellent approach to assess whether the adjustments you’ve made have a positive impact on your cycle time.
Cutting down the travel time
The amount of time it takes for materials to arrive at a company’s warehouse strongly impacts how quickly the cycle time is completed. Purchasing supplies from nearby manufacturers or distributors can cut down on travel time dramatically.
By doing this, shipping expenses would probably be reduced as well. While purchasing from local wholesalers can be more expensive, the reduced transit time, as well as reduced shipping costs, can make it worthwhile
Evaluating the flow in the warehouse
The overall order fulfillment time can vary depending on how a company’s warehouse is organized. Employees can work in the place more effectively with improved space.
A warehouse can be optimized in a variety of ways. Initially, reduce the distance among the coordinating teams. This procedure shortens the distance that a package must travel to reach another team.
Moving critical resources to locations with high population densities is also a good idea. Handling time is decreased when staff can easily obtain the items they need.
Putting supply chain technology to use
In recent years, supply chain technology has advanced considerably. These days, a professional eCommerce organization simply has no space for manual tracking inventory and storage.
Putting supply chain technology to use
The sourcing, manufacture, and order delivery can all be automated using different supply chain management systems. Technology can reduce errors and speed up operational and management processes during the order fulfillment process.
Final Words
Your order fulfillment cycle time could make a big difference between struggling to keep the customers happy and reaping the rewards of recurring business from loyal customers.
Knowing what your OFCT is will help you evaluate how well your order fulfillment process is working. This is a crucial measure for your company to monitor because research on online shoppers’ thoughts about quick deliveries is strong.
As a result, the scalability and expansion of your business can be increased by making the effort to optimize this process and continuously working to reduce your order fulfillment cycle time.
