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 – We strive to increase the internal order communication percentage by optimizing the use of efficient mediums like the proprietary order management system and reducing reliance on slower methods.
- Order Communication Cycle Time – We strive to reduce order communication cycle time by minimizing the time taken to convey and register orders into the firm’s order management system.
- Order Information Error Rate -We strive to reduce order communication cycle time by minimizing the time taken to convey and register orders into the firm’s order management system.
- Order Processing Automation – We strive to increase order processing automation by implementing more automated features in the order management system.
- Order Placement Percentage – We strive to increase the order placement percentage through more efficient channels, optimizing client use of preferred instruments such as email, phone, or mail.
- Average Order Value – We strive to increase the average order value by encouraging higher-value orders through the firm’s eCommerce platform.
- Shopping Cart Abandonment Rate -We strive to reduce the shopping cart abandonment rate by improving the checkout process and encouraging more visitors to complete their purchases.
- Average Order Time – We strive to reduce average order time by improving the efficiency of order management staff in handling client orders.
- Maximum Size – We strive to optimize the maximum size metric by ensuring appropriate limits on client orders, if necessary.
- Order Fill Rate – We strive to increase the order fill rate by ensuring more orders meet client specifications and are fulfilled correctly.
- Time to Ship – We strive to reduce time to ship by minimizing the time it takes for an order to be shipped and delivered to its destination after the order is 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 – We strive to increase the percentage of products returned and resold by optimizing the resale process for goods returned in good condition.
- Returns Processing Cycle Time – We strive to reduce returns processing cycle time by speeding up the process from receipt of the returned item to settlement (reimbursement or replacement).
- Percentage of Returns in the Warranty Period – We strive to increase the percentage of returns within the warranty period by encouraging customers to return defective products while the warranty is still active.
- Percentage of Products Returned in Good Order – We strive to increase the percentage of products returned in good order by ensuring more goods are returned in resalable condition.
- Return Rate – We strive to reduce the return rate by minimizing the percentage of goods sold that are returned, focusing on improving product quality and customer satisfaction.
- Order Refund Rate – We strive to reduce the order refund rate by minimizing the need for reimbursements through improved product quality and delivery accuracy.
- Total Cost of Ownership – We strive to reduce the total cost of ownership by streamlining the return and resale processes to minimize expenses related to handling returned products.
- Per Item Handling Cost – We strive to reduce per item handling cost by improving the efficiency of dealing with returned goods, thereby lowering the facility’s monthly expenses.
- Scrap Rate – We strive to reduce the scrap rate by minimizing the percentage of returned goods that are unqualified for resale and must be disposed of or recycled.
- Time to Return Orders – We strive to optimize time to return orders by ensuring a reasonable and clear return policy duration that balances customer needs and operational efficiency.
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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.
