Your online store is pulling in a ton of sales. Great!
But are you getting your orders where they need to go quickly, accurately and cost-effectively?
Is your fulfillment program enhancing or dragging down customer satisfaction and company profitability?
Are you tracking the right fulfillment metrics to even know the answer to these key questions?
Online sellers can use many performance benchmarks to analyze and optimize order fulfillment processes. But, in Amware’s experience, the four most important are:
- On-time shipping – the ratio of orders shipped on or before the requested date or cut-off time versus the total number of orders shipped. This metric could be #1 in importance given that 69% of shoppers are less likely to shop with a merchant again if their order is not delivered within two days of the date promised. Another 14% will stop shopping with the merchant if their delivery is late just once. If your on-time shipping ratio is poor, you may need to change shipping methods and/or boost your warehouse operations efficiency by streamlining warehouse layout and adding automation.
- Receiving efficiency – the time it takes from arrival of goods at the dock to when they are available for sale (also known as dock-to-stock time). Just because your product has arrived at the fulfillment center doesn’t mean it’s available to fill orders. Deliveries have to be checked to ensure that the items and quantities received match what was expected, then checked for damage, scanned into the warehouse management system and placed in their assigned racks or bins. Only then are they available for picking, packing and shipping to customers. If your dock-to-stock time is too long, it’s costing you money in unfilled orders.
- Inventory accuracy – the variance between the product count recorded in your inventory management system and the actual physical inventory in your warehouse. Variances can occur if there are inaccuracies in receiving or order shipping data, sometimes as a result of spikes in order volume. If the variance is too large, you may experience stock-outs and backorders, resulting in higher costs and unhappy customers. To prevent this, some companies periodically perform cycle counts to manually verify physical inventory and reconcile it against data in the system.
- Shipping accuracy. Nobody’s perfect, but shipping the wrong item or the wrong count can cost your company big time for additional and/or return shipments and restocking costs. There’s also the cost of sales lost when customers cancel an order rather than wait for a replacement. Research shows that 23% of ecommerce returns result from customers receiving the wrong product. Accurate order picking helps you maintain both customer satisfaction and profitability.
As the old saying goes, you can’t manage what you don’t measure. By tracking these and other fulfillment metrics that matter most to your business, you can take fast action to remedy anything that isn’t up to par.
If you lack the time or resources to develop and analyze key fulfillment benchmarks, consider partnering with a third-party provider like Amware Fulfillment. In addition to other advantages of logistics outsourcing, Amware can help you define the KPIs that make sense for your business goals and provide regular and on-demand reports of performance against those metrics.
For more information on our ecommerce fulfillment capabilities, reach out to Amware.