Customer Order Cycle Time

Category: Supply Chain.

As a business owner, you must already know how important customers are for your company. Not only are they the core of your success but keeping them loyal and fulfilling their orders in time should definitely be one of your top priorities. How can you make sure that the orders you’re fulfilling reach their expectations and how can you improve your services so as for them to remain faithful?

If your business has a supply chain, then you should be very well informed about the supply chain metrics, because they are an integral part of maintaining an efficient business. These metrics are used to monitor your company and consequently, optimize it.
One of the most important supply chain metrics you should consider is the customer order cycle time. Read on to find out everything about this useful tool that will help your company evolve fast and easily.

What is the Customer Order Cycle Time Metric?

This metric deals with measuring how long it takes to deliver a customer order after the purchase order is received by your company. The customer order cycle time metric will show you exactly the average cycle time, typically in days including the weekends, between order placement by the customer and the order delivery to that specific customer.

It is an easy, yet very effective formula that will always keep you and your team informed about how efficient your supply chain process is and how well your company manages to fulfill your customers’ orders. You will then have the chance to find ways to optimize your services and evolve constantly.

The formula of this metric is the following:

Customer Order Cycle Time
=
Source Cycle Time + Make Cycle Time + Delivery Cycle Time.

As you can see, this metric depicts a process which occurs at the interface between the retailer and the customer. Therefore, it involves the processes which are part of receiving and filling the orders sent by customers. It starts when the customer is interested in the services your company offers and decides to make use of them and it ends with the same customer receiving his/ her order.

This Process can be Clearly Divided into Four Stages:

  • Customer arrival: Represents the moment when the customer realizes he wants/ needs your company’s services and communicates his/ her wish to your firm. His/ Her wish becomes an order, sent either by phone call or by mail;
  • Customer order entry: involves the specific client informing retailers what he/ she wishes to buy. The aim of the customer order entry is to be as quick and efficient as possible. All the supply chains affected should receive the information as well; Customer order fulfillment: the order is filled and sent to the customer, after going through a series of processes: picking the product from the inventory, packing it, transporting it to the destination;
  • Customer order receiving: The product gets to its destination and the customer receives the order in time.All the stages of this smooth process can be easily kept under control with the customer order cycle time metric. It’s easy to apply, useful and it helps you optimize your services constantly and keeping your customers happy.

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