Top Order Fulfillment KPIs To Have on Your Radar

What you do before a product lands on a customer’s doorstep can be the difference between retaining or losing their business. An effective order fulfillment process is one way to ensure that products are delivered safely and efficiently. It encompasses the entire process, from receiving an order to delivering it to the customer. Productive order fulfillment sets a clear path toward more satisfied customers, repeat business, and a positive reputation for your business.

KPIs or key performance indicators are how you keep track of and measure that productivity and find ways to get the most out of your order fulfillment process.

What is Order Fulfillment Success? 

As mentioned above, order fulfillment success is achieved by efficiently and accurately completing customer orders. It directly impacts your bottom line and, therefore, the success of your business. When done correctly, you can increase customer satisfaction, reduce unnecessary costs, and improve your operations.

Order fulfillment KPIs provide measurable values for you to stack against just how effective your operations are. Let’s dive into what those metrics are:

H3: Order Accuracy Rate

The order accuracy rate is an order fulfillment metric that measures the percentage of orders delivered without errors. This is a vital metric if you’re looking to avoid inventory inaccuracies, missteps in your processes, or order entry errors.

How to Calculate Order Accurate Rate

To get the number of error-free orders, you simply divide the number of orders fulfilled without errors and the total number of orders, and then take that number and multiply it by one hundred.

How to Improve Order Accuracy

For ways to improve order accuracy:

• Implement barcode scanning systems
• Use automated picking systems
• Provide regular training to staff
• Conduct regular audits and feedback sessions

Order Cycle Time

Order cycle time is the total time from receiving an order to delivering it to the customer. Reducing order cycle time can enhance customer satisfaction and operational efficiency. 

Measuring and Reducing Order Cycle Time

To measure order cycle time, track the time stamps of order receipt, processing, and delivery. 

How to Improve Order Cycle Time

Strategies to reduce cycle time include:

• Streamlining order processing workflows
• Automating repetitive tasks
• Enhancing communication between departments
• Using data analytics to identify and eliminate bottlenecks

On-Time Delivery Rate

On-time delivery rate may be one of the most important order fulfillment KPIs that customers largely depend on you getting right – every time. It is your promise to get the products they need within the given time frame. 

The formula for Calculating On-Time Delivery Rate

To get this percentage, divide orders delivered on time by the total number of orders and multiply that sum by one hundred. 

How to Improve On-Time Delivery Rate

• Improve inventory management
• Optimize routing and transportation
• Maintain clear communication with customers
• Use advanced forecasting tools to anticipate demand and adjust resources accordingly

Inventory Accuracy

Inventory accuracy measures how accurately inventory levels match the recorded amounts.

How to Track and Maintain Accuracy 

• Conduct regular cycle counts
• Use inventory management software
• Implement real-time inventory tracking systems
• Train staff on proper inventory handling and recording procedures

Return Rate

The return rate is the percentage of orders returned by customers. It is an important order fulfillment metric because high return rates can indicate issues with product quality, accuracy, or customer satisfaction.

How to Calculate Return Rate

To get an accurate percentage of your return rate, divide total returns by total orders delivered and multiply that sum by one hundred.

Strategies to Improve Return Rate

• Improve product descriptions and images
• Ensure accurate order fulfillment
• Enhance quality control processes
• Offer excellent customer support to address issues quickly

Customer Order Lead Time

Customer order lead time is the time taken from a customer places an order to when they receive it.

How to Measure

Measuring the customer order lead time requires tracking timestamps for order placement, processing, shipping, and delivery to calculate the lead time.

Cost Per Order

If your processes aren’t efficient, you’ll start to see how much of your budget is going down the drain due to order fulfillment errors. One way to rectify this is to track and measure the cost per order, which is the total cost of fulfilling an order.

How to Measure

To get the accurate cost per order, divide the total fulfillment costs by the total orders.

Strategies to Reduce Cost Per Order

• Optimize labor costs through automation
• Negotiate better rates with suppliers and carriers
• Improve warehouse efficiency
• Reduce waste and improve resource utilization

Perfect Order Rate

Perfect order rate measures the percentage of orders that are complete, accurate, and delivered on time. 

How to Measure

If you take the total perfect orders, divide it by the total orders, and divide that sum by 100, you’ll have an accurate measurement of the perfect order rate. 

Strategies to Improve Perfect Order Rate

• Ensure accurate and complete order fulfillment
• Maintain high inventory accuracy
• Optimize order processing and delivery times
• Implement comprehensive quality control measures

Assessing and measuring order fulfillment through KPIs is one of the lifelines of your business. To improve efficiency, reduce costs, and enhance customer satisfaction, fulfillment KPIs give you the insight you need to make that possible. By taking into account metrics like order accuracy rate, order cycle time, and on-time delivery rate, among others mentioned above, you can easily identify the areas you need to improve and create an effective strategy to make your order fulfillment process run smoothly. 

Kibo Commerce has a long history of helping B2B and B2C businesses optimize their order fulfillment process. Our flexible order fulfillment software allows you to better track fulfillment performance, automate fulfillment logic, and create custom workflows that increase productivity.  Learn more about how we can help you optimize order fulfillment.