Taking Stock: Is Your Brand Tracking This Key Metric?
When it comes to e-commerce fulfillment, there are key metrics you should be thinking about when aiming to make good on promises to your customers. There's one metric in particular that many brands might not be putting at the top of their list, but they should. It’s the “perfect order” metric — a collection of key performance indicators (KPIs) in delivery logistics.
In today’s uncertain market, it’s never been more important to assess and improve your organization’s processes and systems. This article explains what the perfect order metric is and why it matters. Additionally, we’ll explore three top metrics e-commerce providers should keep top of mind to optimize their fulfillment operations.
Striving for Perfection
As the saying goes, what isn’t measured, isn’t managed. Perfect order tracking provides a comprehensive, at-a-glance view of fulfillment performance. It takes into account what percentage of customers had the perfect experience from click to delivery. Did the customer receive the full order with the right products on time and damage free?
Traditionally, most organizations monitor performance by evaluating each individual touchpoint. Whether you’re assessing the order management system (OMS), picking and packing rates, or last-mile tracking, each part of the process is usually measured as individual metrics.
For example, a 2 percent failure rate at one juncture of a product’s journey may be acceptable, but if you add up the success/failure rates at all the touchpoints, you may start to see a very different picture of what consumers are experiencing. If a few touchpoints each had a 2 percent failure rate, then you could really be looking at a 6 percent failure rate overall, meaning 6 percent of your customers are unhappy, not 2 percent.
Consumers want reliability and the perfect order metric is customer centric. According to e-commerce statistics worldwide, having products delivered to one’s home is still the most popular way to receive online orders, regardless of the retail category. At the end of the day, what you should be asking yourself is: Did we meet all of our standards at every touchpoint?
Top 3 Order Fulfillment Metrics
Look at e-commerce fulfillment through a consumer lens. Online sales are expected to continue to claim more of the retail landscape. By 2026, it’s estimated that global retail e-commerce sales will exceed $8.1 trillion and the overall e-commerce share of retail sales will hit 24 percent. Optimally, you want the total time from click to doorstep to be within three days to four days or less (and not business days).
Order cycle time is king of the e-commerce fulfillment space because it reflects the average length of time that passes between the customer placing an order, the order being shipped, and when it arrives. Measuring order cycle time enables strong command over the time spent processing an order through the fulfillment center. This metric also provides the details needed to select the right carrier mix to optimize cost and transit time.
Best practices involve managing order fulfillment through three core pillars — service, cost and quality. Whether you're an outsource provider or handle fulfillment in-house, operating within those three pillars gives you a balanced approach to the business.
For example, you don’t want to be so focused on costs that you lose quality in another area, or be so service oriented that you wind up with an outsized cost factor. Orders picked per hour is a solid bottom line benchmark. You want to measure your productivity to help ensure that your fulfillment-specific costs are in line with how much time was spent putting an order together.
Your goals should be customer centric while constantly striving to improve your dock-to-stock KPI, measuring the length of time from when a receipt lands on your dock until it's in a pickable location. Inventory availability is key to navigating supply chain bottlenecks.
How AI Helps You Keep Up
Artificial intelligence (AI) is a disrupter. It improves the way you organize the warehouse from customer support to inventory management. Supply chain resiliency is still a concern when you consider that 80 percent of executives surveyed by Deloitte believe consumers will prioritize stock availability over retailer loyalty.
This is where AI can make the difference by providing more predictive insights that can transform inventory planning and inventory placement. Guidance on where demand is coming from enables your supply chain to get inventory into the right area at the right time to maximize demand and speed. Machine learning (ML) tools can also give insights into consumer behavior when it comes to reverse logistics.
Partnering with a third-party logistics provider (3PL) with a platform to digest all this data in real time can be a game changer. An experienced 3PL has the infrastructure to not only track inventory, but notify brands of stock volumes, which is crucial for maintaining customer loyalty.
Finding Order in Order Fulfillment
Although speed in fulfillment operations is important, consumers want reliability most of all. The goal is to get inventory closer to customers with multinode fulfillment and a network of carriers. Your systems should be designed to balance the cost vs. service equation as customer expectations drive the evolution of inventory management and placement.
It’s more important than ever to evaluate your progress no matter where you fall in the supply chain. Monitoring the KPIs that fall under the core pillars of service, cost and quality will help you navigate e-commerce fulfillment in this uncertain market.
Being able to improve the percentage of orders that are fulfilled successfully without incident (i.e., inaccurate orders, late deliveries or damaged items) gives you a competitive advantage. Monitoring the perfect order metric over time paints a more accurate picture of delivery success, as well as your ability to keep promises to your customers. Being consistent is vital to driving repeat purchases and building customer loyalty.
Jamie Saucedo is the senior vice president of business operations at PFS, an e-commerce fulfillment provider that facilitates each operational step of an e-commerce order in support of DTC and B2B brands and retailers.
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As Vice President of Business Operations, Jamie Saucedo is responsible for PFS' global portfolio of 70 brands. Throughout her 10+ years at PFS she has served in various roles across the organization, giving her a wealth of industry knowledge across verticals. Jamie applies her expertise to guide our clients to successful eCommerce operations.