5 Most Useful Fulfillment Metrics
2. Cash-to-Cash Cycle Time
Cash-to-cash cycle time is commonly regarded as a good indicator of the health of a company’s supply chain and of overall market competitiveness. It's calculated from this equation:
inventory days of supply
days of sales outstanding
Cash-to-cash cycle time indicates how your supply chain processes impact your company. Inventory days of supply are impacted by your ability to manage inventory, how well you forecast and plan, how reliable your suppliers are at making on-time deliveries, and how effective your transportation management and warehousing processes are.
While internal operational and financial measures can affect value, the most obvious to the customer are those associated with the perfect order. The perfect order index is a widely recognized and recommended measure that combines a number of key metrics.
3. Perfect Order Index
The individual metrics of a perfect order (shipped complete, delivered on time, damage-free with the correct documentation, pricing and invoicing) are multiplied together to calculate the perfect order index. For instance, if you were performing at a 95 percent level in each of the four individual measures, your perfect order index would be 81.5 percent (95 percent x 95 percent x 95 percent x 95 percent).
This index measures your performance and value from your customer’s view. Unfortunately, many companies have problems measuring what happens outside their distribution centers and find this metric difficult to track. But information flow on shipments from carriers and the ability of companies to process this information are getting better.
4. Back Order Fulfillment
It may not do those orders any good, but you find out how well your back orders are cleared. Track this, and review and address the root causes of back orders, because they have a huge impact on customer satisfaction. Resolving them is nonvalue-added work, but it's a cost that shouldn’t be incurred.