As Ops folks, we all know the importance of KPIs and metrics.
But until now, there hasn’t been a single, quantitative KPI to measure ecommerce fulfillment performance and, more importantly, provide direction for improvement.
At Etail, we’re changing that.
That KPI is the Ideal Order Ratio. Here’s how it works.
First, let’s understand the concept of “Ideal Order”.
An “Ideal Order” measures each order across nine criteria to ensure that the order meets customer expectations and also meets operational metrics that directly affect net income from that order.
If an order meets all nine criteria, it is considered “Ideal”. Dividing the number of Ideal Orders by the total number of orders yields an Ideal Order Ratio – the percentage of time your ecommerce fulfillment system was firing on all cylinders.
By tracking your Ideal Order Ratio, you can give your entire team a clear understanding of your ecommerce operational efficiency. And because Ideal Order records and aggregates data for nine different attributes against every order, you can use it to identify the specific actions needed to move your Ideal Order Ratio closer to 100%.
At last – you have a single, quantitative KPI to set corporate objectives and ensure organizational alignment. Plus individual Ideal Order attributes provide KPIs for functional areas; help to enforce service level agreements with carriers, 3PLs and other partners; and aid in setting targets for cost reduction and cap ex projects.
Why is the Ideal Order Ratio such an important KPI? It’s because now everyone can see how well your orders are being fulfilled and identify areas for improvement. According to a study by McKinsey & Company, companies that have highly aligned teams are 50% more likely to meet or exceed their business goals than companies with low levels of alignment.
We’ve developed Ideal Order Insights, an analytical tool that works with your current OMS, IMS, WMS platforms to implement Ideal Order in your organization. Click here to learn more about Ideal Order Insights.