Order Processing
Order processing is the first task in the order-to-cash procedure. Orders are accepted through various means such as phone, fax, website, email or personal. Order processing KPIs are performance metrics that measure the efficiency and effectiveness of the order processing system. These KPIs include order processing time, order accuracy, order volume, and order cancellation rates.
Related: Order Entry Clerk, Customer Service Representative, Order Fulfillment Specialist, Sales Support Specialist.
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- Internal Order Communication Percentage – The percentage of orders conveyed internally for each of the following mediums versus the total number of orders: proprietary order management system, intranet, telephone, facsimile, mail).
- Order Communication Cycle Time – The average amount of time (in hours) required to convey and order internally, from the submission of the order by the client to registration into the firm’s order management system.
- Order Information Error Rate – The percentage of orders registered into the order management system that has mistakes (wrong address, product details, invoice details, etc.) versus the total number of orders registered.
- Order Processing Automation – A yes/no metric showing whether there are automated features of the order processing procedure, employing a type of order management system.
- Order Placement Percentage – The percentage of orders submitted by each of the firm’s order placement instruments (email, phone, mail) versus the total number of client orders.
- Average Order Value – The total worth ($US) of client orders submitted through the firm’s eCommerce website divided by the number of orders submitted during a similar time period.
- Shopping Cart Abandonment Rate – The percentage of visitors who placed products to their shopping basket but do not finish the checkout process versus the number of guests with active shopping carts.
- Average Order Time – The total order management staff time devoted to client orders (e.g., on the phone, registering information, etc.) divided by the number of orders managed during a similar time period.
- Maximum Size – A yes/no metric showing whether the firm puts a maximum size limit on client orders.
- Order Fill Rate – The percentage of orders met according to client specifications versus the total number of orders submitted.
- Time to Ship – The average amount of time needed for an order to be shipped and arrive at its expected destination according to the date the order was submitted.
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Order Management Specialist Job Responsibilities
Order Management Specialist Job Responsibilities KPIs include tracking order processing efficiency, monitoring customer satisfaction levels, and ensuring timely order fulfillment and delivery.
- Complete daily inventory checks to ensure order accuracy.
- Maintain the company’s order processing manual.
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- Manage the company’s various shipping vendors.
- Set up and document the order process for new customers.
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Returns
The returns processing office makes sure that the returned goods are properly processed and stored for later use. Returns processing office KPIs are designed to measure the efficiency and effectiveness of the returns processing team. These KPIs include metrics such as the number of returns processed, time taken to process returns, and customer satisfaction with the returns process.
Related: Returns Specialist, Return Support Specialist, Returns Manager, Returns Clerk.
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- Percentage of Products Returned & Resold – The percentage of products that are returned, accepted in good condition (no defect), qualified for resale, and then resold in a specified time period (e.g., quarterly, yearly) versus the total number of returned goods.
- Returns Processing Cycle Time – The total time required to deal with returns in hours, calculated from receipt of the rejected order to the settlement of the return (either reimbursement to the client or the delivery of a replacement item).
- Percentage of Returns in the Warranty Period – The percentage of goods returned within the active warranty period versus the total number of returns during a specified term.
- Percentage of Products Returned in Good Order – The percentage of goods returned, accepted in good condition (no defect) and qualified for resale versus the total number of returned goods.
- Return Rate – The percentage of goods sold that are returned to the distribution team versus the total number of goods sold.
- Order Refund Rate – The percentage of orders reimbursed by a vendor versus the total number of orders in a given term.
- Total Cost of Ownership – The total expense of originally obtaining the merchandise, reselling it, receiving it as a return and transferring it through an alternate market or disposing of it.
- Per Item Handling Cost – The average expense of dealing with returned goods, indicated as total facility expenditure per month divided by the number of goods handled.
- Scrap Rate – The percentage of returned goods that reconsidered unqualified for resale and are disposed or recycled versus the total number of returned products.
- Time to Return Orders – The number of days during which the vendor allows a standard return (open to exclusions).
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Order Management Objectives
The successful management of all orders received is an essential part of the company’s sales processes. Order management objectives are designed to measure the business organization’s order management system. The greater the efficiencies, the higher the number of goods ordered and dispatched, the greater the company bottom line.
- Improve (reduce) the cost per order – The cost per order KPI is defined as the total cost of fulfilling an order. In order to calculate this variable, the total fulfillment costs are divided by the total number of orders over time: the lower this value, the more efficient the order fulfillment process.
- Improve the fulfillment accuracy rate – The fulfillment accuracy rate measures the rate at which customer orders are processed correctly. This ratio is calculated by dividing the correctly completed orders by the total number of orders. If this ratio is low, then your order fulfillment processes may be substandard or inefficient.
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- Improve the rate of return – The rate of return KPI tracks and measures the percentage of shipped items that are returned to the company. It is calculated by dividing the number of items returned by the total number of items shipped. The higher this ratio, the greater the chance that there is a problem.
- Improve the customer order cycle or order fulfillment cycle time – The customer order cycle or order fulfillment cycle time KPI measures and tracks the average length of time it takes from when a customer places an order until they receive it. It is calculated as follows (Time customer received the order – Time order placed) ÷ Total orders shipped.
- Improve the perfect order rate – The perfect order rate is the percentage of orders that your warehouse delivers without incident. It is calculated by dividing the orders completed without incident by the total orders placed. The higher this ratio, the more efficient the order fulfillment process is.
- Improve the on-time shipping rate – The on-time shipping rate KPI measures and tracks the ratio of orders shipped on or before the requested shipping date versus the total number of orders shipped. The lower the rate, the less efficient the fulfillment process, and vice versa.
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KPIs or Key Performance Indicators, including real-time tracking for the orders department, are designed to measure the optimal functioning and success of the organization’s ability to manage the customer order-to-cash life cycle.
Within the orders department, the critical performance areas that must be measured are the effective processing of customer orders and returns from start to finish. Metrics to be evaluated include the order cycle time, order information rate, average order size, number of completed orders versus the number of returns, shopping cart abandonment rate, inventory control, return rate, refund rate, and daily inventory management and control.
