Order cycle time is an essential concept for businesses to understand and manage. The shorter the order cycle time, the better off your business will be in terms of customer satisfaction and loyalty.
This article will explain what order cycle times are and their effect on your business’s revenue.
What is Order Cycle Time?
Order cycle time is the time it takes for an order to go from being placed to being fulfilled and delivered.
It involves all the steps taken from when a customer places their order until they receive their purchase.
This period of time can vary depending on the type of product, supplier, shipping method, and other factors.
Implementing strategies to reduce order cycle time can be beneficial for businesses in a variety of ways. For example, faster delivery times can increase customer satisfaction since customers don’t have to wait as long to receive their orders.
Customers generally will choose a company with fast delivery time over a company where they must wait longer for their purchase.
Shorter order cycles mean that businesses can process more orders and increase profits. Shorter order cycles can also increase the number of customers using your products.
Calculating Order Cycle Time
You can measure or break the overall order cycle time into individual components.
For example, you might track how long it takes to process an order, pick items from inventory, package them, and ship them.
You can measure how quickly customers receive their orders compared to when they were placed. This is also known as fulfillment speed or delivery time.
By measuring order cycle time, you can identify improvement areas and ensure customers receive their orders quickly and efficiently.
Efficient order cycle times help improve customer satisfaction which is vital to running a successful business. It’s important to continually track and measure your order cycle time as it can easily change over time due to factors like seasonality or changes in supply.
Example of Order Cycle Time: Manufacturing
In the manufacturing industry, order cycle time is the total time required to complete an order. It includes the time spent selecting raw materials, processing and production, packaging, shipping, and delivery.
The order cycle time can vary greatly depending on the product and process used.
For example, suppose a company is manufacturing a complex product, such as an automobile. In that case, the order cycle time may be much longer than if it were manufacturing a simple product, such as clothing.
Specific processes used in manufacturing can affect the total order cycle time.
For example, more efficient or automated machines may reduce the overall order cycle time by reducing labor costs and eliminating unnecessary steps.
Improve your Order Cycle Time
There are several ways you can improve your order cycle time. These include shifting resources, improving warehouse flow, and utilizing helpful software.
One way to improve order cycle time in manufacturing using shift resources is by increasing the frequency of production orders. Companies can use shift resources to determine the most efficient frequency of production orders. This allows them to produce more products in less time and with fewer resources.
Improve Warehouse Flow
A well-organized warehouse layout can help optimize the flow of goods and reduce the steps taken to fill orders. This could include reducing walking distances, minimizing redundant tasks, and streamlining the process from receiving raw materials to finished shipping products. Warehousing equipment such as conveyer belts and automated systems can be used to improve the speed of operations.
Utilize the Right Software
Implementing inventory management software can help streamline processes and reduce lead times. This type of software allows for real-time tracking of order status and accurate forecasting so that items are on-hand when needed.
An enterprise resource planning (ERP) system can help streamline the ordering process, making it easier for manufacturers to plan and manage production orders.
With an ERP, manufacturers can quickly access information about materials, inventory levels, delivery dates, and production schedules.
This reduces the time it takes to process and ship orders, resulting in shorter order cycle times.
An ERP system also provides real-time visibility into all parts of the ordering, manufacturing, and distribution processes. This allows manufacturers to identify any potential problems or opportunities for improvement quickly.
This system can also help reduce costs by automating processes, eliminating manual data entry, and providing greater control over inventory.
How LillyWorks Can Help
By reducing your total order cycle time by even just a minute, you can free up your personnel time to focus on other tasks that generate revenue. This means that every minute you shave off your order cycle time is an opportunity to increase productivity and profitability for your business.
Contact us if you want to turn your business into a well-oiled generating machine.