Order Shipment Cycle Time

Order Shipment Cycle Time

KPI Details

Order Shipment Cycle Time measures the speed and productivity with which suppliers process and prepare orders for delivery to their customers. A high value for this KPI may be related to a number of systematic inefficiencies within the order fulfillment process, such as slow order entry processes, understaffed loading docks, poor inventory management, and/or inaccurate demand forecasts. High shipping cycle times may lead to customer dissatisfaction, especially in cases where customers can track the shipping status of an order. High shipping cycle times can also lead to higher costs per order and can bottleneck the shipment of other orders when warehousing space is scarce.

KPI Definition

The number of hours required to process a customer order, from the time when the order is placed until the time the order is shipped by the supplier.

KPI Best Practices

• Up-to-date inventory management systems and demand forecasting
• Well defined inventory location procedures to minimize order picking time
• Standardize formats of purchase orders to minimize need for order verification

KPI Calculation Instructions Order Shipment Cycle Time?

The times of two events are used to derive this KPI: (1) the time that a customer places an order, and (2) the time that the order is shipped by the supplier. Order Shipment Cycle Time is the difference of these two times. In order to derive the mean (i.e., average) value for Order Shipment Cycle Time, take the sum of time for suppliers to ship all orders and divide it by the number of orders shipped during the same measurement period. For orders that are shipped to customers only partially filled, do not count that as a shipped order until the rest of the order is shipped.

KPI Formula :

Sum of Time to Ship Customer Orders / Total Number of Customer Orders Shipped