Long delivery times, lost packages, and incorrect items can lead to customer frustration and loss. 85% of shoppers do not want to return to a store after a poor delivery experience. This indicates that any commercial organization should strive to optimize its order fulfillment process. And to improve something, you first need to measure it. In our case, we are talking about order fulfillment KPIs.
Tracking these KPIs will help you identify bottlenecks in your supply chain, ensure process transparency, and maintain a high standard of customer service. Understanding what works well and what doesn’t will allow you to optimize fulfillment processes and, consequently, increase company profits.
Every company has its own unique characteristics, and its set of relevant fulfillment KPIs can vary. However, there are generally accepted standards that are relevant for most market players. These are the ones we will discuss next.
KPIs for Successful Order Fulfillment
In the context of fulfillment KPIs are metrics that help track and analyze the efficiency of processes from order receipt to delivery to the end consumer. Measuring these KPIs will help you identify the strengths and weaknesses of your business and areas for improvement.
With a large number of metrics, it’s easy to get confused and not know which aspects of the business to prioritize. To avoid getting overwhelmed by data, focus on the most significant metrics for your company. Below, we have highlighted the order fulfillment KPIs that have the greatest impact on profitability and operational efficiency. These will help you better understand your business processes and make informed decisions for their improvement.
Customer-oriented metrics
Customer satisfaction is a top priority for any commercial organization. If you want to grow your business, you need to track metrics that are directly related to customer satisfaction and their willingness to make repeat purchases. This includes fulfillment KPIs such as:
✔ On-time delivery percentage: This metric reflects the percentage of orders delivered to customers on time or earlier than the specified deadline. A high percentage indicates that your customers receive their goods within the agreed-upon timeframe and remain satisfied with the service. This contributes to repeat purchases and positive recommendations. Conversely, delivery delays can lead to customer disappointment, increased return costs, and loss of consumer trust.
✔ Total order fulfillment time: This is the time required to process and deliver an order from the moment it is placed until it is received by the customer. It includes order processing time, preparation for shipment, delivery, and confirmation of receipt. Optimizing this metric will help reduce customer wait times and enhance the overall purchasing experience.
✔ Internal order fulfillment time: This KPI calculates the time spent solely on internal order fulfillment processes, excluding delivery time. It includes receiving goods at the warehouse, picking, packing, and transferring the order to the shipping department. Reducing the internal order fulfillment cycle time will help accelerate fulfillment and improve delivery efficiency.
✔ Perfect order fulfillment KPI: This is the percentage of orders that have been fulfilled without any errors or delays. A perfect order meets all customer requirements from the moment it is placed until delivery and does not result in any complaints or returns. Monitoring and increasing the percentage of perfect orders will help you improve the efficiency of fulfillment processes and enhance service quality.
How to calculate these fulfillment KPIs:
| KPI | Formula |
| On-time delivery percentage | (Number of orders delivered on time / Total number of delivered orders) × 100% |
| Total order fulfillment time | The total number of days between the placement of all customer orders and the moment of receiving the products divided by the total number of orders for a specific period of time |
| Internal order fulfillment time | The total number of days between the placement and shipment of customer orders divided by the total number of orders for a specific period of time |
| Perfect order fulfillment KPI | Percentage of orders delivered on time × Percentage of orders fulfilled × Percentage of orders without damages × Percentage of orders with accurate documentation × 100 |
Warehouse metrics
In the case of fulfillment, companies need to consider the efficiency of processes even before goods reach the warehouse shelves. This includes evaluating the efficiency of goods receiving processes, checking their quality, and ensuring their correct receipt. Any inefficiency here will impact all stages of order fulfillment. Key inbound fulfillment KPIs include:
✔ Dock to warehouse cycle time: This is the time required to move goods from the moment they arrive at the receiving dock until they are fully placed in the warehouse and ready for use or shipment. A fast cycle time indicates more efficient receiving and placement processes. This, in turn, contributes to increased inventory turnover and reduced dwell time of goods in the warehouse.
✔ Incoming orders received: This metric reflects the number of orders processed by warehouse staff per hour of receiving. It allows for the assessment of labor productivity and the efficiency of incoming order processing processes.
✔ Receiving and placement lines: This metric reflects the number of stock keeping units (SKUs) received at the warehouse and the number of SKUs placed on the shelves by staff per hour of receiving. It allows for the evaluation of the speed and efficiency of goods receiving and placement processes in the warehouse.
✔ Inventory accuracy: This KPI helps measure the accuracy of assessing the quantity of goods in your fulfillment center. It is determined by the percentage ratio of the actual quantity of goods to the quantity stated in the accounting system. High inventory accuracy is important for preventing losses, excess inventory, and errors in order processing.
✔ Average warehouse capacity utilization: Inefficient use of warehouse space can lead to difficulties in accessing goods, increased order processing times, and the risk of errors. Optimizing this metric will help you reduce storage costs, increase product availability, and improve customer service.
How to calculate these fulfillment KPIs:
| KPI | Formula |
| Dock to warehouse cycle time | sum of cycle time in hours for all supplier deliveries divided by the total number of supplier deliveries |
| Incoming orders received | total number of orders processed during receiving / Total number of labor hours worked during receiving |
| Receiving and placement lines | total number of received lines / Total number of labor hours required to properly store all inventory in the order |
| Inventory accuracy | (Number of counted items matching the inventory database / Total number of counted items) x 100 |
| Average warehouse capacity utilization | (Used warehouse space volume / Total warehouse space) × 100 |
KPIs for tracking operational efficiency
After an order is placed, you need to pick, pack, and deliver it to the customer. The more accurately and quickly you do this, the more likely the customer is to return to you and recommend your company. To achieve maximum fulfillment efficiency, it’s important to track the following fulfillment KPIs:
✔ Perfect order rate: This is the time taken to fulfill each individual order, from the moment it is received to the moment it is delivered to the customer. This KPI helps determine how quickly your company processes orders and meets customer needs. A perfect order rate indicates high productivity and responsiveness in customer service.
✔ Orders picked per hour: This is the number of orders that have been picked and prepared for delivery within one hour. It is a key indicator of labor productivity in the warehouse. A high figure typically indicates well-organized and optimized order picking processes.
✔ Number of picked and shipped lines per hour: When orders contain multiple products or lines, it’s important to efficiently manage the picking of each individual line. This ensures fast and accurate overall shipment. This KPI evaluates the average time taken to pick and ship each individual line from incoming orders. The higher its value, the more efficient your warehouse operates. It indicates its ability to pick and ship a greater number of items per unit of time.
How to calculate these fulfillment KPIs:
| KPI | Formula |
| Perfect order rate | (Number of orders shipped / Number of orders placed) x 100 |
| Orders picked per hour | Total number of orders picked / Total number of hours worked during picking |
| Number of picked and shipped lines per hour | Total number of picked and shipped order lines / Total number of hours spent on picking and shipping |
Financial metrics
Financial KPIs reflect the impact of order fulfillment processes on the profitability of the enterprise. By tracking these indicators, you can identify areas where costs can be reduced and operational profitability increased. These include:
✔ Distribution costs (as a percentage of sales): This metric reflects the share of distribution costs in total sales volume. It helps assess the overall financial health of operations.
✔ Distribution costs (per shipped unit): This metric reflects the average cost of delivering one shipped unit of goods. It allows for the evaluation of the efficiency of company logistics operations and identifies potential areas for cost reduction.
✔ Inventory days of supply: This is the number of days your company’s inventory can satisfy current demand. A high value indicates a large inventory, which may be inefficient in terms of capital management. Conversely, a low value indicates that your inventory is quickly depleted. Inventory shortages can lead to missed sales opportunities. Monitoring this fulfillment KPI allows you to optimize inventory management and strike a balance between demand fulfillment and minimizing storage costs.
✔ Average order cost: This metric reflects the average expenses incurred by the company to process and fulfill one order. High costs may indicate process inefficiency. This can occur due to inadequate automation, suboptimal resource utilization, or issues in the supply chain.
How to calculate these fulfillment KPIs:
| KPI | Formula |
| Distribution costs (as a percentage of sales) | Total distribution costs / Total sales volume |
| Distribution costs (per shipped unit) | Total cost of goods sold / Total number of units shipped |
| Inventory days of supply | (Average inventory cost per year / Cost of goods sold per year) × 365 |
| Average order cost | Total warehouse expenses for the reporting period / Number of orders received during the same period |
Ysell.pro – Track Order Fulfillment KPIs in Real-Time
Key performance indicators are an integral part of successful business management. It’s not just about collecting data; it’s about analyzing them and transforming them into specific strategies and actions that contribute to process improvement and overall business growth. If you don’t analyze order fulfillment KPIs, you risk missing out on what’s hindering your company’s development and leading it to losses.
Tracking multiple KPIs manually can be a laborious and error-prone process. Ysell.pro offers a ready-made solution for swift and high-quality assessment of fulfillment efficiency through the automation of the KPI system.
What you will get:
✔ Prompt report generation;
✔ Transparency of all order fulfillment processes;
✔ Less time spent evaluating warehouse performance;
✔ Employee motivation.
The system can automatically gather and analyze data necessary for calculating various order fulfillment KPIs. It also provides tools for visualization and reporting, simplifying the identification of trends and problematic areas.
Additionally, Ysell.pro integrates with online platforms and transportation services, allowing you to gain a more comprehensive view of order fulfillment operations. This simplifies making informed decisions and increases the overall efficiency of your business.
Frequently Asked Questions about Order Fulfillment KPI
1. What are order fulfillment KPIs?
Order fulfillment KPIs are measurable metrics used to assess the effectiveness of order processing, assembly, delivery, and service processes within a company.
2. Why does my business need an order fulfillment KPI system?
TheKPI system allows you to measure, analyze, and manage performance in the realm of order fulfillment KPIs. This will help you enhance operational efficiency, improve customer service, and increase company profitability.
3. Where to start implementing fulfillment KPIs?
Start by defining your business goals and identifying key order fulfillment processes. Then, choose the most relevant and measurable metrics for each process and develop a system to track them.
4. When can you expect to see the first results from implementing order fulfillment KPIs?
The initial results from implementing fulfillment KPIs can be noticeable within a few months after launching the system, depending on the complexity of processes and the speed of employee adaptation.
5. How to motivate employees to achieve established KPIs?
Employee motivation can be facilitated through a system of rewards and incentives, training and development opportunities, involvement in the establishment of fulfillment KPIs, and feedback on goal achievement.
