How to Measure Fulfillment Performance?

Fulfillment is the tail end of the supply chain and it involves delivering the order to the customer.  Since this is a crucial component, you need to make sure you’re doing everything right.

A failed or delayed shipment resulting in disappointed customers wastes the effort of the entire supply chain.  Therefore, the importance of having a reliable fulfillment partner that can ensure timely deliveries is an absolute must.

Aaron Alpeter, Founder of Capabl and Izba, answers the question of measuring fulfillment performance by saying, “All brands need to take a look at their success criteria before they can evaluate or measure performance for it.”

Effectively, this means you need to create an RFP to answer these basic questions:

  • How much storage do you require?
  • Where and when do you expect your orders to be?
  • What are the pros and cons of choosing your time, location and fulfillment strategy?
  • What kind of costs are you expecting with the services you need?

Once this is done and you begin working together, brands tend to make the mistake of finding the most convenient metric sheet they can to apply an evaluation criterion on their fulfillment performance.

And in the era of digital marketing, like fulfillment centers, all relevant data you find on search engines is mostly quantitative content that’s checked for marketing accuracy more than its actual practicality. 

Suffice it to say, they’re not always credible and reliable.

Problems with Quantitative Measurement of Fulfillment Performance

When you consider metrics for measuring fulfillment performance, you can get multiple perspectives depending on which KPI is deemed most important.

In fact, if you ask different people what they think On-Time fulfillment (OTIF) is, chances are that you’ll end up with several definitions.

This is why quantitative approaches to measuring fulfillment performance often lead to disagreements and sometimes even conflict when two different organizations follow their own definitions and perspectives.

Some common problems resulting from differences of perspectives include different metric measurement and performance gauging practices, challenges in processing and amending orders based on differences in understandings of SLAs and processing expedited orders, to name a few.

You can have everything documented but just because there isn’t clear and open communication to address concerns, queries and requests, you can experience several problems.

Brands and fulfillment centers that become rigid in their way of doing things tend to make it difficult for other parties to work with them. There needs to be flexibility among both parties and a willingness to adjust.

This is where qualitative approaches to measuring and improving fulfillment performance should be considered.

Qualitative Measurement of Fulfillment Performance

To understand qualitative measurement, you only need to look at your relationship with your fulfillment partner. If it is strained, you probably are not in a good place.

Working in supply chain requires a professional and a personal connection with the people you work with to collaborate and get work done.

There’s a reason brokers and other bigger players in the market are able to get better rates than everyone else. 

Knowledge and expertise in the industry can only get you so far; you need to have communication and relationship-building skills in order to develop mutually beneficial relationships.

Although difficult at times, it’s easy to develop a quality relationship with your partner by being patient and clear in your communications.

By being a logically sound point of contact, partners won’t hesitate to share bad news and rather than playing the blame game, collaborating to figure out a solution can be the wisest choice to make.

Businesses working with fulfillment partners don’t have much information except for the obvious behaviors and actions of their partners to see where they stand in their professional relationships with one another.

If there’s friction or a general disregard for one another, it might be best to seek out other options in the market to work with.

The idea is to have a standard methodology that both parties agree with and it’s also important to understand that it can take time to sort through loopholes and practical issues with the theoretical understandings stated in the contract.

You’re going to have several expectations and it’s helpful to work with the assumption that nothing is given; there’s no understood fact, especially when it comes to the liability of inventory and order deliveries.

There’s no universal truth or an unspoken agreement when it comes to who’s responsible for inventory if something happens or if your orders don’t make it in time to be shipped the same day. 

It’s easy to assume things as logical but having clear discussions and written agreements can help mitigate risks and issues beforehand. 

It’s best to discuss everything, down to the last detail before you begin implementation and then find out what needs improvement.  

Third-Party Involvement in Measuring Fulfillment Performance

It’s always best to rely on a neutral third party to serve as a mediator and provide objective analyses for both parties to consider a common ground.

For starters, you can find, shortlist and select a fulfillment partner by making use of platforms like the Izba Exchange which hosts over 1,000 fulfillment centers.

This free platform comes with reliable supply chain consultancy and is the ideal place to begin your search.

Once you have a fulfillment partner you’re comfortable working with, you can come to an understanding to employ neutral third party software that helps analyze performance that serves as not just assurances for brands, but also as performance endorsements for fulfillment centers for their portfolios.

This is where Capabl comes in as an unbiased post-fulfillment analytics tool that can verify how much of any given SLA is achieved.

The software makes it easy for brands and fulfillment partners to look at objective metrics that show the differences between achieved and agreed-upon fulfillment KPIs.

By ratifying and certifying how well FCs are achieving their target SLAs, Capabl serves as an objective, trusted resource that can help negotiate future deals for both parties.

Need Help? 

If you’re trying to find fulfillment partners or improve your relationships with your current partners, feel free to reach out to us. We do more than just provide robust cloud software that helps measure fulfillment performance.