Order cycle time is one of the most important warehouse KPIs that directly affects the customer experience in the eCommerce business. It is critical to keep this number as low as possible in eCommerce fulfillment and supply-chain management operations. Gone are the days when a week-long delivery time was acceptable. Customers these days expect same-day delivery or a maximum of two-day delivery. In order to meet such expectations, it is very important to keep the order cycle time and order lead time as short as possible.
What is Order Cycle Time?
Order cycle time is the average amount of time between when an order is placed by a customer and when it is shipped, excluding the actual shipping time. If we include the shipping time as well then it becomes the order lead time. This number reflects the efficiency of your warehouse operations and the order fulfillment process.
Why is Customer Order Cycle Time Important?
Order cycle time provides eCommerce businesses with important information regarding the optimization of their supply chain process. It has a direct impact on order fulfillment and order accuracy rates. By evaluating this number, eCommerce businesses can identify how they can optimize their processes or software system to bring automation and efficiency to the order management process.
Shorter shipping and order cycle time can help meet customer expectations of faster delivery. It also improves customer loyalty and ensures repeat business for the brand if they are satisfied with a positive experience created due to a shorter customer order cycle time.
It also helps in identifying the problems in the supply chain process. You can remove the manual processes in your supply chain to increase its efficiency and decrease the order cycle time.
Order cycle time also helps indicate when you are ready to scale. If you have a shorter order cycle time, it means that you have already optimized your supply chain process and can replicate those processes in the other markets and segments that you are trying to scale.
How to Calculate Order Cycle Time
Order Cycle Time = (Delivery Date – Order Date) / Total Orders Shipped
Businesses calculate their order cycle time for a specific duration like a month or quarter. In the above formula, the delivery date is the date when the customer receives their order, the order date is the date when a customer places an order, and the total orders shipped is the total number of orders delivered in a specific duration of a month or quarter.
How to Improve Your Order Cycle Time
Improving the order cycle time is purely operational. While it is crucial to ensuring smooth business operations, the good news is that businesses have complete control in improving their order cycle time.
Warehouse Efficiency and Automation
Manual tasks and bottlenecks in the warehouse can increase the order cycle time. A lot goes on between the time a customer places an order and the time it gets delivered. There are many order fulfillment processes that go on in the warehouse, from picking and packing to processing orders to be shipped out. Warehouse management is a complete science and modern eCommerce and 3PL logistics companies use advanced automation and technology to improve their efficiency.
Technology and Automation
If you are fulfilling your orders yourself then you should invest in technology and automation to optimize your warehouse setup and make it more efficient to meet customers’ fast delivery expectations. If investing in an order management software is out of your budget or if you are unsure of which software is best for you, you can outsource your order fulfillment to a third party logistics (3PL) fulfillment center who already has the software setup.
SOPs and Protocols
Setting up guidelines and training your warehouse staff are equally important. Despite the automation and use of warehouse technology, you cannot entirely remove the human input from the warehouse. Hence, it is important to train your staff to perform at maximum efficiency and ensure accuracy in the order management in the warehouse.
How 3PL Fulfillment Centers like ShipBots can Help
ShipBots provides complete 3PL logistics services including warehousing and inventory management. Its state-of-the-art warehouses are equipped with the industry-leading logistics technology stack, located strategically on the east and west coasts and the mid-west, which helps in shortening the customer order lead time and order cycle time. ShipBots technology provides simple integration with all the major eCommerce platforms so that you can automate your order management system through our fulfillment network.
ShipBots also provides intelligent reporting to help you see your inventory in real-time and predict future demand to carry out an accurate demand forecast. With these estimates, you can avoid the situation of stockouts and backlogs in your inventory to ensure there are no backlogs to slow your order cycle time. With simple integration, your orders get automatically processed allowing them to quickly move through our fulfillment network and be shipped to your customers in a few hours.