As more and more companies scale their supply chain and customer base, there are many metrics brands can track to analyze the effectiveness of their fulfillment operations.
One of the simplest supply chain KPIs to use is fill rate, a key indicator of how efficiently customer demand is being met.
In this article, we’ll break down the different types of fill rates, how to calculate them, and how brands can boost performance through smart logistics optimization.
What Is Fill Rate?
Fill rate is the percentage of orders a brand can fulfill without running out of stock. The item fill rate is a good indicator of order management, fulfillment efficiency, and a brand’s ability to meet customer demand with its inventory levels. When a company has a higher fill rate, it means it’s able to minimize lead time and prevent lost sales to items on backorder.
Types of Fill Rate
The most common type of fill rate brands use is order fill rate, though other kinds of fill rates can give the retailer valuable knowledge into how efficient their supply chain and operations are.
Order Fill Rate
Order fill rate is a supply chain KPI that measures the percentage of total orders that have been filled. This metric gives brands insight into operational efficiency, product demand, and supplier relationships. A brand can also use the order fill rate to find areas for improvement in unloading stock, packing time, and product buying decisions.
Line Fill Rate
Line fill rate measures the percentage of order lines that are completely fulfilled out of the total number of order lines. An order line refers to a unique item and quantity on an order. For example, if there are 10 total order lines across five orders and 8 of those lines are fully fulfilled, the line fill rate is 80%.
Case Fill Rate
This particular fill rate metric is used mostly by wholesalers and distributors. It’s the percentage of product cases that were shipped compared to the total number of product cases that were originally ordered. For example, if a brand sold 10 cases but shipped nine cases, the case fill rate would be 90%.
Warehouse Fill Rate
The warehouse fill rate measures the percentage of orders that a warehouse ships compared to all of the orders received. This metric is similar to the order fill rate but from the perspective of warehouse operations. The warehouse fill rate gives brands insights into the efficiency of their warehouse operations.
Vendor Fill Rate
Vendor fill rate measures the percentage of vendors who have completed order shipments out of the total number of vendors. This metric allows brands to assess vendor performance.
Why Is Fill Rate Important?
Fill rate is a relatively simple metric that allows brands to see how efficiently and reliably they can process orders and ship them. By understanding, tracking, and improving their fill rate, ecommerce brands can unlock a range of benefits.
For example, a consistently high fill rate signals strong inventory management. It helps build trust with first-time buyers and encourages loyalty among returning customers by minimizing stockouts and delays.
That said, fill rate is not just important for customers; it is also crucial for internal management. For instance, tracking warehouse, case, and vendor fill rates can help brands determine how effectively their supply chain is operating and identify areas for improvement.
What Is a Healthy Fill Rate?
While a 100% fill rate is ideal in theory, which means a brand can fulfill every order received, this is nearly impossible to achieve in a real-world situation. The average brand’s fill rate is between 85 and 95%, with most aiming for 97-99%.
That said, higher isn’t always better.
A fill rate close to 100% might indicate overstocking, which can tie up capital, waste warehouse space, and increase the risk of inventory loss or damage. As with most fulfillment metrics, fill rate is most useful when evaluated alongside other key data points to provide a complete picture of performance.
How to Calculate Fill Rate
As part of supply chain digitization, many third-party software programs calculate various types of fill rates automatically to provide brands with real-time insights. However, it can be done manually.
Fill Rate Formula
To calculate order fill rate, use this formula:
Fill Rate = (Total Completed Orders / Total Orders) X 100
The key part of this formula is deciding on a time frame for calculating the fill rate. This can be a day, a week, a month, a quarter, or even longer. The chosen period should reflect what insights a brand is trying to uncover.
Calculating the fill rate for different periods at other points throughout the year can reveal additional insights.
After which, a brand needs to determine the total number of orders it could fill without running into stockouts. Next, calculate the total number of orders placed during that same period.
To calculate the fill rate, divide the number of orders filled by the total number of orders placed and multiply by 100 to get a percentage.
Let’s look at an example:
A team wants to calculate the fill rate for the past month. Over the past month, they have had a total of 1,200 orders placed and were able to fill 1,029 of them completely.
Fill Rate = (1089 / 1200) X 100
The fill rate for this example is 90.75%, which is right in the middle of the average range for fill rate.
How to Increase Fill Rate with Flowspace
Fill rate is one of many metrics used to measure fulfillment effectiveness. As mentioned earlier, aiming for a 100% fill rate isn’t always ideal because it can signal overstocking and tied-up capital.
A better goal is a high, sustainable fill rate, achieved by aligning operations with a refined fulfillment strategy. Choosing a trusted logistics network optimization partner like Flowspace is key here.
Flowspace’s order fulfillment software supports the entire post-purchase experience and integrates seamlessly with your key sales channels. Teams can manage orders, generate reports, and monitor fulfillment and delivery activity, all from one dashboard.
Make product inventory management easy with complete visibility into inbound logistics, outbound logistics, and in-progress stock. Real-time tracking, smart routing, and predictive inventory views help ensure you’re fulfilling orders efficiently and quickly.
Scale faster with intelligent software that streamlines fulfillment, shortens delivery times, and boosts customer satisfaction. Contact our team today to learn more.
Written By:
