What is Perfect Order Fulfillment? Definition, Formula, and Benefits

what is Perfect Order Fulfillment

In any supply chain, order fulfillment is the last and perhaps the most crucial part that needs to be handled perfectly. The customer that initiates the sale and receives the product at the end marks the completion of that particular sale.

Amidst all the moving parts and complications, business managers seldom get the time to monitor fulfillment KPIs like Perfect Order Fulfillment.

For most companies, the dock-to-stock time may have a lot of importance while others may be trying to optimize shipping routes and time.

Regardless of how complex and globally spread your supply chain management is, if a customer doesn’t receive the product, it’s all for naught. To put it simply, here’s an overview of what Perfect Order Fulfillment Entails:

What is Perfect Order Fulfillment?

To measure perfect orders، you need to first determine what ‘perfect’ looks like. Qualitatively, you need to consider the experience you want the consumer to have and then work toward building a supply chain and operations to match that ideal expectation.

At a high level, brands want to make sure that the right product is delivered to the right place at the right time in the right way.

In that sense, Perfect Order Fulfillment is the percentage of orders delivered correctly, meaning there are several components. For most businesses, the aspects of Perfect Order Fulfillment are as follows:

1. The Right Place

What it means: Ensure your supply chain and fulfillment operations deliver orders to the right address.

The first part of Perfect Order Fulfillment is ensuring every delivery goes to the correct place. Delivering products to the right place is often more complicated than it may seem.

The United States increases its number of buildings by about 1% a year, meaning more than one million new addresses are added every year.

Possible Problems and Solutions:

Some companies only need to deliver to a handful of locations, but others may need to ship anywhere in the United States.

Similarly, others have to ship hundreds of orders in the same city or county, making it difficult to keep track of addresses.

Traditional use of Excel and printed sheets can often cause problems with accuracy as warehouse workers and drivers can’t promise absolute perfection with a compromised, manual infrastructure.

Companies must decide whether it makes more sense to take responsibility for warehouse management and logistics or use the resources of 3PLs and FCs.

Companies may need to consider service level agreements, area coverage, vendor reviews and important factors like visibility when considering outsourcing. The point is to achieve a higher rate of perfect order fulfillment.

Getting the order to the customer at their desired location is the ultimate goal of a business. All your supply chain designs and strategies pay off when you perfectly fulfill an order.

2. With the Right Product

What it means: Ensuring the right SKU, i.e. the right product type, size, color, variant and even amount. 

Just delivering to the correct address is only the first step of Perfect Order Fulfillment. 

The delivery also needs to include the right product (or products, if more than one). People receiving a delivery generally know what to expect and base their decisions on that.

Possible Problems and Solutions

Problems with product delivery are apparent within the first few seconds of opening the package. 

Delivering the wrong size of a product may make it useless for someone. Shipping one protein bar instead of another could render it useless because a buyer needs to avoid certain ingredients.

There’s no end to the problems caused when companies fail to deliver the right products. Unfortunately, some businesses package products too similarly, so companies need to pay close attention when preparing any package for delivery.

Using barcodes, rather than looking at the packaging, is an excellent way to manage this. Using smart inventory software that can nullify chances of manual errors is imperative for warehouses and FCs in charge of handling thousands of products and orders.

The complexity of choosing the right size and color variants can be minimized by using warehouse management systems as well. After all, there’s only one order that the customer wants and needs.

Quantity issues can appear more often than people expect. 

For example, a customer using a food cart service may ask for six bananas, but receive six bunches of four or five bananas instead. That’s far more than they intended, even if it’s not a huge amount.

That may be what the system says, but if the customer thought they were ordering individual bananas instead of bunches, the issue is with the interface they’re buying from.

Ensuring delivery of the correct quantity means clearly telling the customer how much of any product they can expect to receive.

Whether it’s a single product, multiple items of the same type, or different items of various categories, without successful order fulfillment, your efforts may go down the drain. 

3. At the Right Time

What it means: Ensuring the order reaches the customer in time.

Problems and Possible Solutions

Speed is another consideration. Many manufacturing locations follow just-in-time delivery strategies, which aim to maximize the effectiveness of all deliveries and reduce unnecessary storage times. This can boil down to specific hours for delivery times.

Consumers become regular when and only when they regularly get products on time. 

People expect most packages to ship within a few business days at most, and to arrive at their homes with no unnecessary delays. If products take too long to arrive, they may be too late for the customer’s needs.

Similarly, some products are time-sensitive and have to arrive quick enough or they will go bad. You can optimize dock-to-stock time, and warehouse inventory management and invest in better infrastructure.

Remember that some locations are fundamentally more difficult to reach on time than others. 

People may live in areas where the postal service only visits them once a week. Some people will also order packages for less-common destinations, like US territories outside the mainland.

The ideal shipping system accounts for things like destinations when estimating delivery times. Luckily, automated systems can usually predict shipping times within a day.

4. In the Right Condition

What it means: Products need to be handled with care and caution regardless of their fragility or delicacy.

Buyers generally expect products to arrive in perfect condition. This can be hard at times, which is why ping pong balls have the highest freight class (and are therefore quite expensive to ship).

Problems and Possible Solutions

For customers, damaged products are unacceptable, and businesses are on the hook for replacements.

Fragile products and products with limited lifespans need to be stored, managed and delivered with special care. 

Similarly, as stated above, investing or renting out adequate storage spaces will be necessary if you’re handling products like organic fruits.  

Shipping insurance can help cover potential losses caused by products arriving in poor condition. However, they won’t make a frustrated customer happy which is what the business really wants.

Sadly, even offering returns or replacements are sometimes not enough for customer satisfaction because inevitably, it takes double the amount of time it would have taken for the initial order.

Advantages of Achieving Perfect Order Fulfillment

Companies with accurate demand forecasting and high Perfect Order Rates tend to require less inventory, have fewer disruptions, and have shorter cycles for cash. 

They also experience higher customer satisfaction, translating to more brand loyalty, more purchases, and additional recommendations to others. 

This isn’t surprising when you look at the underlying truth. When you look past all of the details, Perfect Order Fulfillment is about doing all things correctly the first time. That’s what customers expect, and when you meet their expectations, you make them happy.

As stated in the beginning, order fulfillment and inevitably the whole supply chain itself are parts of a process that ultimately aims to achieve customer satisfaction.

The only way a business grows is if its customer base and sales figures increase. 

You need customers, especially in the era of social media, to brag about getting on-time deliveries of remarkable products. Most shoppers leave online stores when they don’t find delivery estimates mentioned.

Similarly, a significant number of shoppers have disclosed in surveys their dissent for shipping delays and how it ruins the experience for them. 

Perfect order fulfillment is directly proportional to customer satisfaction and therefore, sales and ROI.

Takeaway

Perfect Order Fulfillment, as the name suggests, aims to get as close to ideal deliveries as possible.

It’s hard to achieve 100% perfection. With a sufficient volume of deliveries, there’s a near-unavoidable chance that you’ll lose the occasional package or end up with damaged inventories.

However, Perfect Order Fulfillment aims to reduce the expense of making a delivery right, which means resolving whatever problem prevented a buyer from receiving an order. 

By getting as close as possible to 100%, you can ultimately save money and increase ROI.

Perfect Order Fulfillment can also help you identify and resolve any problems with your production and delivery pipeline. 

By monitoring different metrics such as order accuracy and inventory management, you can quickly identify issues with shipping, inventory management or fulfillment. 

Some companies only check these numbers every few months, but fulfillment analytics can provide real-time monitoring and feedback so you can spot issues early. 

Comprehensive logistics and delivery services can further improve your order completion metrics.

Anything less than 97% represents a problem somewhere in your processes. Most delivery problems are avoidable with sensible planning, so it’s always worth keeping your Perfect Order Fulfillment rate as high as possible.

Even if you do everything right, there’s always the chance of a freak storm, a collision on a freeway, or something else disrupting the order. 

Achieving 100% long-term is not a realistic possibility but striving for the best is what distinguishes successful companies. 

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