Key Metrics to Identify Order Management Success for Logistics Actors

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Order Management

Introduction 

Logistics and fulfillment actors serving eCommerce businesses handle large volumes of orders on a daily basis. Hence, you have huge opportunities for growth as online selling has become the norm. But, to keep customer satisfaction and operational excellence high, while growing, it is crucial to keep an eye on a few key metrics to achieve Order Management Success. 

To achieve long-lasting success, you must balance your focus on customer satisfaction and business growth equally.  The key to achieve this happiness from shoppers, which is also linked to business growth, is making sure you achieve order management success. 

All you have to do is to keep in mind various vital metrics that can help you identify the success of your order management processes, get precise insights into what is working and what is not, and data that can fuel your future strategies. Pretty simple, right?


Here are seven metrics to identify order management success for your business: 

  1. Fulfillment Accuracy Rate 

The best way to calculate your Fulfillment Accuracy Rate is to divide the orders that have been delivered correctly (to the right person at the right place and on time) with the total number of orders in a given period of time. This will help you gain better insights into the rate at which customer orders are fulfilled correctly. Ideally, Fulfillment Accuracy Rate should be as close to 100% as possible. However, If this rate is even 90%, it means your operations are at par with what is required. If not, you must work on identifying operational issues such as wrong labeling of products, miscount in picking and packing quantity, mislabelled shipping labels on parcels. These errors will lead to an increase in returns and will impact the customer experience. 

  • Cost Per Order 

As the term suggests, this is the total cost of processing an order. This can be easily measured by dividing total fulfillment cost by the total number of orders in a given time period. This is a crucial insight so, in order to stay on top of your operations, you must calculate it regularly. Not only will this help you optimize your order management process, but it will also help you build a financially stable growth strategy. 

  • Inventory Accuracy 

Inventory accuracy can be calculated when you match the physical count of inventory with the count of inventory recorded in the account ledgers. Maintaining inventory accuracy is the key to a smooth order management process. When you have visibility over your inventory, your orders will be processed faster, chances of making mistakes are eliminated, and you can always know when a particular product is running low. This will allow you time to manage your inventory and avoid stockouts. You can also choose to measure inventory by periodical cycle stock count. It will help you achieve and measure inventory accuracy in the warehouse.


  • Order Processing Speed 

The easiest way to measure the speed of orders processed is to measure the average time taken from receiving an order to processing the same for dispatch. The faster you can fulfill an order, the happier your customers will be. It helps your brand build a positive image, helps meet SLAs, and reduces the rate of cancellation due to customer’s change of mind, which can happen if the order fulfillment time is larger. Today, customers expect deliveries in a span of just 2 days. Needless to say, timely delivery is crucial. If you have a healthy order processing speed, make sure you maintain it and improve it if it is not up to the mark. This defines how efficient your order management operations are, more than any other metric.

  • Rate of Return 

The rate of return means the number of items that were shipped by you and were returned for various reasons. This can be calculated by dividing the number of items returned with the total number of items shipped. This metric helps you gain visibility to critical issues pertaining to the quality of the products shipped, highlighting any underlying problems with your stock. Once you have this insight, you can address these issues with suppliers or your employees and actively work towards bringing this number down. 

  • Order Fulfillment Cycle Time 

The duration of time it takes from the point when a customer places an order until they receive it, is known as Order Fulfillment Cycle Time. To measure this accurately, you must calculate the average time it takes to complete one order in a given duration. This way, you can gain insights into the accuracy of your fulfillment cycle and bring forth issues that are holding your business back from being responsive to customers. 

  • Perfect Order Rate 

The Perfect Order Rate refers to the number of orders that were processed and delivered without any hindrances or blocks. To calculate this, you can divide the total number of orders fulfilled smoothly with the total number of orders placed. This is a clear reflection of the success of your order management operations as it allows you to understand order processing time, quality of the order, customer satisfaction, and overall fulfillment speed. If this is on the lower side, you must make active efforts to bring this number up to satisfaction. 

Conclusion 

Tracking these metrics will provide you with accurate information and pave the way for an optimized order management process. Every fulfillment business is different, so you must evaluate and choose the parameters that work best for your organization and keep track of end-to-end operations. If you aren’t keeping track of these metrics, you are losing out on valuable data that you can utilize for better customer experience and overall customer satisfaction when it comes to eCommerce fulfillment, and you definitely shouldn’t.

Choose the metrics that work for you and stay on top of operations to achieve optimal results and identify order management success in times when logistics actors are expected to fulfill orders in a timely and secure manner. Once you achieve order management success, customer satisfaction and growth will follow suit. Just like that. It really is that simple, and effective. 

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