Logistics and Shipping

How to Improve Order Cycle Time (and Why It’s So Important)

Order cycle time is one of the most important metrics to measure for the health and relative success of your organization – and yet, it’s something many business owners unwittingly neglect. Properly measuring (and eventually improving) order cycle time can help your business cut costs, generate more revenue, and even keep customers happier.

But how? And what can you do to improve order cycle time in your organization?

What Is Order Cycle Time (and Why Does It Matter)?

Order cycle time is, simply, an objective measure of how long it takes for a customer to receive their order, from the moment they place the order to the moment it arrives at their door. A shorter order cycle time is better, representing faster turnaround and delivery.

This is valuable to your business in several ways:

·       Happier customers. Arguably the best benefit of a better order cycle time is a happier customer base. Your customers are going to get what they order much faster and more efficiently, making them more likely to place more orders in the future.

·       Faster turnaround. The faster turnaround itself also means you can spend less time managing the order and more time on other orders or more important things.

·       Inventory improvements. Completing orders faster means items spend less time in inventory limbo. Combined with other inventory optimization efforts, this can revolutionize your inventory management and warehousing strategies.

·       Miscellaneous efficiency improvements. Improving order cycle time is often a matter of improving efficiency in various channels and with various strategies. These across-the-board efficiency improvements lend themselves not only to a shorter order cycle time but also to a smoother, more cost-effective organization overall.

How to Improve Order Cycle Time

So, what are the most effective strategies for improving order cycle time?

·       Simplify order processing steps. One of the first things you should do is simplify the steps involved with your order processing. The time your customer completes checkout to the time your team is ready to fulfill the order needs to be as short as possible and, therefore, needs to evolve as few steps as possible. Cut out the waste and accelerate this to foster an immediate improvement.

·       Practice smart inventory optimization. Inventory optimization efforts are very useful for improving order cycle time. If your warehouses are organized intelligently, minimizing walking distances and following an intuitive system, it should be much easier for your workers to pick what they need. Better high-level inventory management can also eliminate or reduce the prevalence of issues like insufficient inventory.

·       Incorporate automation in your warehouse. Automation technology is among some of the most valuable technologies for modern businesses because it offers two simultaneous and complementary benefits: it reduces the need for manual effort and improves the consistency of operations. Accordingly, you should work to incorporate automation throughout your warehouse to simplify and streamline your operations.

·       Establish ambitious yet achievable targets for workers. The team members in charge of fulfilling orders should have ambitious yet achievable targets to seek. Objective metrics define success for your organization and push people to improve their own productivity.

·       Use route optimization. Route optimization is the practice of choosing the fastest and/or most cost-effective route for your drivers to follow. You’ll need to do this reliably for each order, potentially shaving a day or more off each delivery time.

·       Leverage real-time tracking. Real-time tracking isn’t going to make your products ship any faster, but it is going to help you identify prospective issues much faster so you can get ahead of them or compensate for them. This is also a great way to improve transparency for your customers.

·       Work closely with your suppliers. Your choice of suppliers and partners will greatly impact your order cycle time as well. If their delivery drivers aren’t reliable, or if you frequently miss expected product shipments, your order cycle times are going to be inconsistent and uncontrollable. Be judicious when expanding your supplier network.

·       Identify inefficiencies and correct them. Look for inefficiencies proactively and work to correct them. If you notice an order that took three times as long as usual, conduct a root cause analysis and track down the origin of the problem; what can you do to prevent this in the future?

·       Analyze and reassess. Adopt a continuous improvement mindset and use objective reports to analyze your order cycle time optimization efforts. Are your strategies working? If not, why?

Even a few of these strategies should allow you to make significant improvements to your order cycle time. Since this is a metric you cannot perfect, there will always be room for improvement – so continue refining and optimizing for as long as you want your organization to become more efficient and profitable.

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