How to Measure and Reduce Order Fulfillment Cycles — Katana (2024)

Order Fulfillment Cycle Time refers to the time it takes from a customer placing an order to them having it in their hands.

Are youronline customershappy with the quality of your service?

Maybe you manage to get your orders shipped on time, but is there room for improvement?

Of course, your product ticks all the boxes when it comes to quality. Unfortunately, nowadays this is not enough when it comes to customer satisfaction.

Indeed, online shoppers have increasingly high demands when it comes to their whole e-commerce experience.

This is especially true when it comes to wait time for online orders. Shoppers want more convenience, quicker gratification, and many other online stores have already adapted to fit this demand.

But don’t sweat. You don’t need to bow out to e-commerce giants, when your independent e-commerce store can thrive. Streamlining yourorder fulfillment cycle timecan help youget the mostout of your e-commerce store.

Order fulfillment time is a major KPI for any business, especially when it comes to “e-fulfillment” — which brings over logistical challenges over your regular orders.

If a customer thinks they have waited too long for an order, they might not be motivated to order from you again. Even worse, they might cancel their order, wasting valuable time and production costs for your business. This may seem unfair as you place your trust in a postal or courier service to get your orders delivered ASAP.

This is why order fulfillment cycle time is an important metric for your scaling manufacturing business to track. You can figure out if it is good enough for your customer and ways to improve it.

Customers are likely to shop elsewhere if they can get goods quicker, even if the products themselves are of lower quality. This may be a bitter pill to swallow, but it is solvable for any business, no matter how big.

Your business can be known for quality and speed. It can be the go-to online store when your customer needs to buy a last-minute birthday present for their cousin. Helping people out of a sticky situation pays dividends and should make you feel great about what you do.

It boils down to the psychology of why people choose to shop at a particular place.

Emotion plays such a big role.

That is why your product alone might not be enough to build up your online sales. You also need to have utility for the customer, to give them a reason to shop online in the first place.

That is why manufacturing jargon likethe order fulfillment life cycleis so important to understand. It has a profound effect on the human side of your business. You want to build your customers’ trust and be a dependable online seller. Quick deliveries show you care about your customers and you will be rewarded through positive reviews and loyalty.

Understanding Order Fulfillment Cycle Time (OFCT)

Identifying your OFCT gives you a valuable insight into the effectiveness of your order fulfillment process. This is an important metric for your business to track, as online shopping consumer data show thatcustomer satisfactionis largely tied up in fast deliveries. Customers can be very picky when it comes to their online shopping.

The life cycle of order fulfillment encompasses many steps taken from when you receive a customer order, to the completed delivery of that order including:

1. Customer places an order through your e-commerce store;
2. You receive the order via email or on your orders page;
3. You place a manufacturing order for the required goods;
4. Your team receives the MO and starts the manufacturing process;
5. The order is assembled, finished, and packed; and
6. The order is delivered to the customer.

When you are dealing with e-commerce, the order fulfillment cycle could take days or even weeks. Sometimes, it could be affected by things outside your control, such as shipping overseas. However, it is important to make sure your average OFCT remains as low as possible.

What you can control, is OFCT in the supply-chain and manufacturing sides of your business. How can you get it as low as possible by just changing things under your roof?

As your business grows, managing order fulfillment time gets more complicated. This is because order fulfillment becomes dependent on many entities in your business. Different departments start working together to complete the order fulfillment process.

These entities could be team members, workstations, warehouses, and materials. Supply chain management is about maintaining effective communication between team members and how they utilize the other parts of your supply chain.

There are many ways to work out your order fulfillment cycle meaning your OFCT can in fact refer to several metrics:

1. Promised Customer Order Cycle Time– this is the expected order fulfillment time that you tell your customers. This will remain constant. Hopefully external factors won’t permanently prolong orders, and you can streamline your order fulfillment cycle so you can lower this over time. This is a good benchmark to keep track of the other metrics below;
2. Actual Customer Order Cycle Time –this is the average time it takes for a customer to receive a product after ordering it. This is the everyday time that works in practice. It is what you should be aiming to reduce;
3. Cash to Cash Cycle Time –the time taken from spending money on raw materials and supplies to when you receive money from them as finished goods; and
4. Supply Chain Cycle Time –how long it takes to fulfill a customer order if the requisite raw materials are at a zero. It is the order fulfillment cycle time, plus the time it takes to order and receive supplies.

Each of these ways of measuring order fulfillment has value when analyzing your business’ order fulfillment and supply chain capacities.

Be careful not to overthink every part of your order fulfillment. It is important to understand and track what is going on in your business, but not so it deters from the running of your operations.