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What is Order Cycle Time and Its Relevance?

August 19, 2022

6 min read

As more companies enter the eCommerce market, it has become significantly more competitive in recent years. With so many companies trying to steal your customers from you, you must find ways to differentiate your brand. One of the best ways to do this is by improving your customer experience and order process. One way to improve the order experience is by reducing the time between when a customer places an order and when they receive it. Businesses of all shapes and sizes rely on rapid order fulfillment to drive customer satisfaction, repeat business, and sales. While most customers are satisfied with the time it takes an online retailer to ship their orders, there is always room for improvement. Causing frustration among your buyers could harm your brand and lead to poor product ratings on eCommerce sites. One of the crucial factors that can make or break your business is your order cycle time. If your business is not optimizing this key metric, read the post to learn its importance and how you can improve it for your business.

What is Order Cycle Time?

The order cycle time refers to the average time it takes to ship an order, excluding the shipping time. This is important because it helps you measure your operations and how efficient they are. 

Significance of Order Cycle Time

Order cycle time is a factor for measuring a company’s efficiency. The shorter the order cycle time, the more quick and sensitive a business is to customer orders. 

Help Detecting Discrepancies in the Supply Chain

The order cycle time is helpful when auditing the supply chain process to identify any inefficiencies or discrepancies that need to be optimized or removed entirely. One example of inefficiency is manual order receiving, which can be time-consuming and prone to errors. 

Understanding Customer Satisfaction

You should try to produce a fast order cycle time. You may increase customer satisfaction by delivering a seamless fulfillment experience. An extended order cycle time will result in fulfillment delays and an increase in dissatisfied customers. A long cycle can lead to fulfillment delays and delivery times, irritating customers. A shorter order cycle time will enable you to deliver a seamless, more likely to be satisfactory service.  

Gauging Readiness to Scale

A short order cycle time indicates whether or not you’re ready for the next step in your business. To expand your operations, you need a supply chain that can handle more orders without affecting overall performance. A short order cycle time may be a good indicator of your readiness.

Order Cycle Time Formula

The order cycle time can be easily calculated with the formula below – 

Order Cycle Time = (Delivery Date – Order Date) / Total Orders Shipped

If a company is making this calculation for a specific time, they need to look at the date the customer received their order and the date on which the order is placed. The number of orders shipped refers to the amount of orders shipped within that specific time frame.

Tips to Improve Order Cycle Time

Measure Cycle Time

The company’s order cycle time varies over time, especially with changes or disruptions in the supply chain. For example, an unexpected delivery exception can result in a much longer order cycle time than usual. Or you may notice a much shorter order cycle time after implementing an automated system to improve your warehouse receiving process. Poor customer service can also lead to long order fulfillment times because the staff is too busy with return transactions. Managing variable factors throughout the supply chain is a challenge that many companies face. Supply chain variables determine how long it takes to complete an order. If you’re consistently monitoring the process, you can reconsider your supply chain practices and make things go faster. For example, if you implement a new process, you need to evaluate whether or not it’s working efficiently by looking at order cycle times.

Define Protocols and Limits

Setting up guidelines on your fulfillment process is important to provide your employees with a guide. For example, limiting the size of batches will speed up the process, and items can quickly be picked or shipped. You may also set limits on when to place inventory reorders so there are no late backorders. It is vital to address orders stuck in transit as soon as they occur, especially during last-minute deliveries. To improve your customer’s experience, you should create a protocol to follow up and work on the order when it is delayed or can not be delivered. Being transparent with your customers will help you maintain a positive customer experience. Setting realistic expectations helps lower customer stress levels and leads to a better experience.

Work On Warehouse Flow

Slowing down the order processing times can result from bottlenecks in warehousing. For example, can pickers easily find items? Is the warehouse spaced adequately so that they can move around quickly? Are all these parts too far from the pickup area? All these roadblocks add up and slow down order processing time. By identifying these inefficiencies, you’re able to reduce order cycle time. Start by measuring your warehouse KPIs and looking for opportunities to make improvements. You may need to optimize your warehouse setup and use warehouse slotting to make the most available space and improve picking efficiency.

Outsource Fulfillment Operations

The easiest way to speed up your order cycle time is by outsourcing the fulfillment process to a third-party fulfillment partner. Finding a third-party company that outsources fulfillment will offer you faster turnaround times and expense control. Ideally, look for a tech-enabled 3PL that can automate significant portions of the fulfillment process. For example, a 3PL will integrate technology into your online store, which will work closely with their warehouses and fulfillment centers. This way, an order will be received in their warehouse or center as soon as possible. Automating these processes will reduce human error and also minimize the need for manual input. This will result in orders being shipped out in a matter of hours, just a few days after purchase, so you can provide the best-personalized customer service experience possible.

How Can Shiprocket Fulfillment Help?

Shiprocket Fulfillment can process your orders with 99% accuracy and deliver them to customers 3X faster along with same-day and Next-day delivery. Shiprocket Fulfillment can help your business as we do the picking, packaging, and shipping of products on your behalf. Using a 3PL provider, you can reduce shipping costs, offer faster deliveries, decrease ordering errors, and create repeat buys.

Final Thoughts

As you can see, improving your order fulfillment times can effectively retain customers and increase conversion rates, so eCommerce businesses need to pay attention to their order management processes. You can offer better service, lower shipping costs, and improve customer experience by optimizing your entire order process, from purchase orders to shipment delivery.

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