Ecommerce brands know that merely shipping an order does not mean success. That customer order needs to be correct, needs to arrive on time, and needs to arrive damage-free. Then and only then has the customer received a perfect order.
Tracking the percentage of orders that are perfect serves as a performance measurement of the efficiency and effectiveness of a brand’s supply chain.
What is the perfect order fulfillment metric?
Perfect order might be the most important supply chain KPI to track because it encompasses so many aspects of the supply chain. It effectively measures the number of orders in which there were no errors. That means the right product was shipped to the right place in the right condition to the right customer at the right time. Calculating this rate can also help brands identify weak spots in the supply chain. For example, if the rate of on-time delivery is low, brands would be wise to invest time into improving that metric to better meet customer expectations.
The perfect order rate is important for determining customer satisfaction and driving customer loyalty. In ecommerce, the customer experience is often synonymous with the delivery experience, so it follows that if a customer receives the correct order on time, overall satisfaction with the order will be achieved, and the customer will feel inclined to place another order.
Components of the perfect order KPI
There are several metrics that go into tracking the perfect order KPI, and brands need to track them all to calculate the perfect order metric. Each of these individual metrics gives brands insight into a different part of the supply chain.
First, brands need to track the numbers of total orders that are packed correctly. If a customer receives a pair of undamaged pants on time, but they actually ordered a shirt, all of the work that went into that order doesn’t matter. Receiving an incorrect order is a huge pain point for customers, and brands need to work to prevent inaccurate orders.
Secondly, brands need to track how many orders are packed with the correct invoice that includes every item purchased. The customer experience doesn’t end when the package lands on their doorstep, but it includes the unboxing experience, too.
Orders that arrive on time
Another metric that brands need to track to calculate perfect order rates is the percentage of orders that arrive on time. In the era of Amazon Prime, consumers expect fast shipping. Brands need to ensure that they can deliver on whatever shipping times they’re promising. However, brands know that delays happen. One way to mitigate the disappointment of a delayed order is to use a software system that tracks delivery and allows brands to communicate the logistics with customers if their orders are delayed.
Orders that arrive undamaged
The final perfect order component that brands need to track is orders that arrive undamaged. If the correct item ships and arrives on time, but it’s damaged and the customer can’t use it, the order will not result in a satisfied customer. Brands struggle with damaged products because they are often damaged during transit and are out of the brand’s control. That’s why it’s extremely important for brands to partner with carriers they trust. Brands can control some aspects of damage during delivery, including ensuring the correct box and packaging materials are used to prevent damage during transit.
Impact of perfect order on customer satisfaction and business performance
Brands know that when customers receive a perfect order, they’re happy. And making customers happy on a consistent basis is the best way to build customer satisfaction and brand loyalty. Continued delivery of perfect orders increases customer satisfaction because customers begin to expect a stellar experience.
In addition to taking a hit on customer satisfaction with imperfect orders, the cost to fix those orders can also impact the brand’s revenue. From the cost of reshipping the right items to the return process to refunding the customer, these costs can add up. It’s much better for brands to get the order right the first time.
How to calculate perfect order rate
The formula to calculate perfect order rate is as follows:
Perfect order rate = Number of perfect orders / Total number of orders
Brands can multiply the result by 100 to convert it into a percentage rate.
How to improve perfect order fulfillment rates
Because the perfect order metric is a composite metric, meaning it’s made up of several different parts, brands can gain specific insights into how they’re supply chain is working by diving into individual pieces of the perfect order metric. This allows brands to target their efforts into making changes that will have the most overall impact. For example, if a brand finds that its perfect order rate is lower than they would like because many orders are not arriving on time, that brand should look into a new carrier or new shipping options to set better expectations for customers. If that same brand focused on product damage when the vast majority of their products were already arriving undamaged, it wouldn’t see as much improvement in the overall perfect order rate.
Because two of the metrics included in perfect order rate deal with carriers — on-time delivery and damage — taking a deep dive into the carriers a brand uses can yield improvements in those areas. For the other two — correct orders and correct documentation — brands need to focus on improving conditions in the warehouse. This can be achieved in by many ways, including employee training or working with a 3PL that patterns with high-quality warehouses.
Benefits of improving your perfect order rate
For growing ecommerce brands, customer satisfaction can lead to brand loyalty. And nothing makes a customer happier than receiving a perfect order.
Improving the perfect order rate also benefits other areas of the supply chain. When an order is perfect, brands don’t need to rely on the returns management process to salvage customer satisfaction. This also results in reduced returns management costs. If incorrect inventory isn’t being sent to customers, that inventory is in the warehouse, able to be sold to a customer who wants it. That means brands are able to be leaner with their inventory turnover, which can also positively impact the bottom line.
Optimize supply chain operations with Flowspace
Flowspace partners with brands to optimize the supply chain. From inbound logistics to outbound logistics, Flowspace’s OmniFlow Visibility Suite gives brands real-time visibility to track supply chain KPIs. But Flowspace’s platform goes beyond just tracking KPIs; Flowspace’s logistics and network optimization platform provides merchants with actionable recommendations for how to improve and optimize their supply chain.
The OmniFlow suite of tools provides visibility and control from fulfillment through delivery with platform-level transparency so brands can stay ahead of low inventory. The platform’s real-time insights and predictive analytics allow brands to forecast inventory needs. Ensuring optimal inventory levels can improve customer satisfaction and build customer retention.
Flowspace’s dashboard shows brands the perfect order rate in full as well as offers a drill–down into the different components that make up the perfect order rate. This allows brands to hone in on improving the areas that need improving, such as on-time delivery or damaged items.
Flowspace’s distributed network of hundreds of order fulfillment centers allows brands to store their products in warehouses that are closer to the end customers, which can reduce shipping times and remove the opportunity for delays. The fulfillment centers also operate under service–level agreements that ensure quality and measure things like order accuracy. Flowspace manages the relationships with those centers, which allows brands to focus on other aspects of the business while maintaining high quality supply chain operations.
Get in touch with Flowspace today to learn more about how Flowspace can help your business optimize for supply chain KPIs.