What is Order Fill Rate and Why Should You Care

WHAT IS ORDER FILL RATE AND WHY SHOULD YOU CARE?

Wholesale or distribution business

Metrics that you can apply to your business to assess your relative performance

Usual profit and cash flow ratios

Judge just how efficiently your business is doing with inventory management

Pay attention to the order fill rate

WHAT IS ORDER FILL RATE?

The order fill rate simply refers to the percentage of customer orders that are immediately fulfilled by available stock

No standard or agreed-upon measure of order fill rate

Companies use different ways of calculating order fill rate according to their needs

HOW DO YOU CALCULATE ORDER FILL RATE?

You can calculate fill rates for line items, SKU or cases for individual invoices. In addition, you can also calculate them across invoices

For the individual invoices, the case fill rate of 87.5% for invoice 1 and 96.6% for invoice 2 are calculated across SKUs

Fill rate is 60% for invoice 1

50% for invoice 2

WHY IS ORDER FILL RATE IMPORTANT?

Meet customer demand Avoid stock-outs Forecasting demand accurately Replenishing your inventory on time Sufficient safety stock Fulfill customer orders immediately

High fill rate may also mask an overstocked scenario

Low order fill rate is a sign that you need to get your demand forecasting and purchasing strategy in order

HOW CAN YOU IMPROVE YOUR ORDER FILL RATE?

Invest in Real-Time Stock Information

A

Give sales representatives the tools and information to keep them informed about your inventory date? Better still, the stock levels should be updated in real-time by using inventory management software

Checking your real-time stock levels via EMERGE App, your salesperson sees that San Marzano tomatoes are out of stock and back ordered for delivery in a month’s time from Italy

Improve Your Sales Forecasting and Purchasing Patterns

B

Historical data is immensely useful when forecasting sales for particular products. The more historical data the better, so get about 3 to 5 years worth

Retail customers find that sales of baby nappies and beer spike in the countdown to Super Bowl

Offer Alternatives and Substitutes

C

Stores don’t want customers to see gaping holes in shelf space or an “out of stock”. Customers will simply bring their purchases somewhere else

Offer alternatives and substitutes for products that are out of stock or face a long delivery cycle.

The RATIO may help you to investigate other areas of your business or workflow so that you can improve your order fill rate

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