{"id":2479,"date":"2017-06-09T10:19:36","date_gmt":"2017-06-09T10:19:36","guid":{"rendered":"https:\/\/brightpearl20.wpengine.com\/retail-kpis-perfect-order-rate\/"},"modified":"2021-04-14T10:36:29","modified_gmt":"2021-04-14T10:36:29","slug":"retail-kpis-perfect-order-rate","status":"publish","type":"post","link":"https:\/\/www.brightpearl.com\/blog\/retail-kpis-perfect-order-rate","title":{"rendered":"Retail KPIs: Perfect Order Rate"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">The Perfect Order Rate is a <\/span><a href=\"https:\/\/blog.brightpearl.com\/understanding-retail-metrics-and-kpis\"><span style=\"font-weight: 400;\">Retail KPI<\/span><\/a><span style=\"font-weight: 400;\">\u00a0that measures how well your business is faring against its customer-centric goals. Are your customers receiving the right products? And in the condition and time frame that was promised? Businesses with higher Perfect Order Rates typically see more repeat business and faster growth.<\/span><\/p>\n<p><!--more--><\/p>\n<p><span style=\"font-weight: 400;\">It&#8217;s a metric that needs tweaking slightly for different businesses, often due to industry and inherent complexities during order processing. Once you have defined your specific Perfect Order Rate metric, it provides a structured way to analyze efficiencies. In this article, I\u2019ll be introducing its concept, as well as some actions that can be taken to improve it. <\/span><\/p>\n<h3><strong>Understanding Perfect Order Rate<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">For most businesses, an order is deemed \u2018Perfect\u2019 if it:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Leaves the <a href=\"https:\/\/www.brightpearl.com\/warehouse-management-system\">warehouse<\/a> on time<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Reaches the customer on time<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Contains the right items<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Doesn\u2019t trigger a return<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Has no negative financial events (such as credit card chargebacks)<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">A business that ships everything on time and has no customer returns or other problems will have a Perfect Order Rate of 100%. The easiest way to track your Perfect Order Rate is to record the count of failures and subtract them from the total number of orders shipped \u2013 every time you get a returned order, mark it on a \u201creturned orders\u201d list, for example. If you need to ship a replacement, count that as a regular order rather than a failure to avoid double counting.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A simple tweak to your <\/span><a href=\"https:\/\/www.bigcommerce.com\/blog\/heres-how-7-successful-entrepreneurs-create-awesome-customer-service\/\"><span style=\"font-weight: 400;\">existing customer service operations<\/span><\/a><span style=\"font-weight: 400;\"> to record the failures suddenly gives you a measurement on the drag on the business.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In order to define whether an order has \u201cshipped on time\u201d, it\u2019s common to choose a cut-off point during the day, before which any order placed needs to be shipped in X days. If you don\u2019t have <a href=\"https:\/\/www.brightpearl.com\/inventory-management-system\">inventory<\/a> to fulfil the order, that\u2019s a valid reason for failure. Orders drop-shipped from vendors are just as relevant to the Perfect Order Rate \u2013 delays on the vendor\u2019s part need to be reported upon.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To determine whether an order has reached the customer on time is much harder (but technically is possible with many modern couriers and tracked packages), or whether the correct item was shipped. Most businesses assume that all is OK unless a complaint is received. While this is not ideal, it\u2019s the best compromise.<\/span><\/p>\n<h3><span style=\"font-size: 16px;\"><strong>Let\u2019s look at an example of this in action:<\/strong><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">If you shipped 1,200 orders in a month, had to re-ship 50 orders due to failed products and received complaints from 10 customers about slow delivery, your Perfect Order Rate would be:<\/span><\/p>\n<h3><span style=\"font-size: 16px;\"><strong>1250 \u2013 ( 50 + 10 ) \u00a0\/ \u00a01250 \u00a0= \u00a095.2%<\/strong><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Note that the 50 replacement orders are included in the shipped total of 1250, since they also have the potential to go wrong.<\/span><\/p>\n<p><a href=\"https:\/\/www.brightpearl.com\/bookdemo\/\"><img decoding=\"async\" class=\"alignnone size-full wp-image-4564\" src=\"https:\/\/www.brightpearl.com\/wp-content\/uploads\/2020\/03\/bp-cta1.png\" alt=\"\" width=\"793\" height=\"274\" srcset=\"https:\/\/www.brightpearl.com\/wp-content\/uploads\/2020\/03\/bp-cta1.png 793w, https:\/\/www.brightpearl.com\/wp-content\/uploads\/2020\/03\/bp-cta1-300x104.png 300w, https:\/\/www.brightpearl.com\/wp-content\/uploads\/2020\/03\/bp-cta1-768x265.png 768w\" sizes=\"(max-width: 793px) 100vw, 793px\" \/><\/a><\/p>\n<h3><strong>Analyzing the result<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Every business is going to be different, and of course the type of products you sell matters enormously. A company selling shoes or clothing may have a high return rate when customers buy multiple sizes and return the unwanted item. You may choose to ignore returns marked as \u201cunwanted\u201d or perfectly executed returns \u2013 clearly you need to have a returns management system in place to be able to get at this data.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The important thing to do is start tracking the metric and then watch for changes. If you see the Perfect Order Rate falling (getting worse), then you can look into the separate failure counts to see where the problem is, and act on it sooner rather than later.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Define your own criteria for a \u201cfailure\u201d and don\u2019t change this too often as it will make trends much harder to spot.<\/span><\/p>\n<h3><strong>What actions can be taken to improve it?<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Set up your failure lists to a level of detail where you can act on the results. So when an order fails to ship on time, record why it\u2019s failed:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Not enough inventory<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Inventory shown on system but not found in warehouse<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Not enough time to process<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Insufficient packing material<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Perhaps you discover that customers are complaining that they are being shipped the wrong items. Slowing down the <\/span><a href=\"https:\/\/info.brightpearl.com\/pick-pack-ship\"><span style=\"font-weight: 400;\">pick and pack process<\/span><\/a><span style=\"font-weight: 400;\"> by adding a check stage should reduce incorrect shipments, but will slow down the entire process \u2013 keep an eye on the Processing Cost per Order metric.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The Perfect Order Rate should be balanced against the profitability measurement. If 5% of your orders are needing to be re-shipped due to damage in transit, you may choose to invest in stronger packaging for all orders \u2013 but only if the extra packaging cost for all orders is less than the profit you have lost through re-shipping the 5%.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Ultimately, once you\u2019ve started to understand your data, you\u2019ll be able to understand the costs of your mistakes and use the data to make decisions.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Perfect Order Rate is a Retail KPI\u00a0that measures how well your business is faring against its customer-centric goals. Are your customers receiving the right products? And in the condition and time frame that was promised? Businesses with higher Perfect Order Rates typically see more repeat business and faster growth.<\/p>\n","protected":false},"author":10,"featured_media":3635,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[116,115],"tags":[],"class_list":["post-2479","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-control","category-retail-operations"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.6.1 (Yoast SEO v27.6) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Retail KPIs: Perfect Order Rate - Brightpearl<\/title>\n<meta name=\"description\" content=\"The Perfect Order Rate is a Retail KPI that measures how well your business is faring against its customer-centric goals. 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