Order accuracy refers to the precision and correctness of fulfilling an order, ensuring that the items requested by the customer are delivered correctly and without errors. It is one of the best metrics ecommerce retailers can track, as this measurement impacts the level of trust between a brand and their customers. Taking small, yet strategic steps to improve order accuracy can offer incredible benefits for your business — from fewer errors and reduced costs, to increased profitability and greater customer satisfaction.
What Is Order Accuracy?
Order accuracy is the percentage of all orders that are fulfilled and delivered to the customer without any errors (like mispicks, etc). A high order accuracy rate indicates that the majority of your customers receive the exact items they ordered, and in top condition upon arrival.
This is an important metric to follow because it demonstrates how successful your brand is in giving customers what they want. In other words, order accuracy is directly tied to your customer satisfaction levels — and ultimately, to your customer retention.
Why Is Order Accuracy Important?
Order accuracy is important because you’re getting immediate interactions from consumers. Due to that, your OA rate plays a major role.
Few things can affect your company negatively than customers receiving orders late or receiving the wrong product. Every order is important. If customers are getting the wrong products or having to wait unacceptable periods to get their delivery, it doesn’t take long for them to take to social media and give it to your business.
You have to understand, one negative review can hurt the company a lot. Many negative reviews has the power to due major damage, you don’t want that.
Inaccuracy and errors can directly influence a customer’s interest in buying from you again. Maintaining accuracy when dealing with new and existing customers is crucial.
(1) Improving Your Fulfillment Process
If you’re measuring your OA rate, you’ll be able to see any flaws in your fulfillment process. Over time, the discernibility of diminished accuracy patterns will become more pronounced and noticeable. In such instances, promptly identifying deficiencies in your supply chain becomes feasible through a careful examination of each step, allowing a comprehensive understanding of the existing shortcomings.
(2) Positive Customer Experiences
When customers get exactly what they ordered in a the time frame they chose, they’re happy.
We point to this study where it shows that nearly 60 percent of customers will leave if they have a negative experience with a company.
This is something we discuss a lot here at Thill Inc. as we do offer customer service to our clients.
Failure to accurately deliver products to customers or errors in quantity may result in facing the repercussions of negative feedback. This could lead to the loss of existing customers. Additionally, managing returns (RTO) and incurring additional expenses for processing and shipping become necessary. Hence, monitoring Order Accuracy (OA) will aid in analyzing your fulfillment process and enhancing your order management for better outcomes.
(3) Fueling Innovation And Growth
Valuable insights stem from monitoring order accuracy. Having tangible evidence of your actual performance enables the discovery of more efficient methods to enhance your order management. This data offers actionable experiences that contribute to informed decision-making and future planning.
How To Calculate Order Accuracy?
When it comes to calculating order accuracy, here’s the formula:
(Order Accuracy Rate = Total Orders Fulfilled Accurately ÷ Total Orders Fulfilled) × 100
Let’s say your brand has fulfilled 10,000 total orders. Of those 10,000 orders, 1,000 involved some sort of mistake. In this scenario, your order accuracy comes in at 90%.
order accuracy rate = [9,000 ÷ 10,000] x 100 = 90%
In many cases, 90 percent is usually a solid percentage, but does it need improved? Let’s find out.
What’s Your Order Accuracy Rate Target?
The complete order fulfillment process includes a lot of different moving parts, including a good deal of human intervention/interaction. A lot of different variables and external factors are at play. This is why it’s not a surprise that reaching a 100% order accuracy can be difficult.
While you may never reach fulfillment perfection, companies should still try to get as close to 100% accuracy as they can. The general rule of thumb is that a 95-98 percent order accuracy rate is good. With the right process in place, you can reach that 98 percent level and higher.
For those of you that have companies in that range, improving your order accuracy by just 1 percent can give you a big competitive advantage over other companies in your industry. We’ve seen it first hand here at Thill Inc., it can move the needle a lot.
If your business is on the lower range scoring 95 percent or lower, you’re likely at competitive disadvantage. Due to this, you do need to focus on improving your order accuracy. The last thing you need is customers that won’t be returning to buy from you again.
Bad Order Accuracy Rates Are Trouble
Whether you prefer it or not, errors in order fulfillment stand as a prominent cause of customer complaints. When customers receive incorrect product quantities or entirely wrong SKUs, it undeniably leads to a negative experience and leaves a detrimental impression of your brand.
To compound matters, around 80% of consumers express a preference for conducting business with a competitor after encountering just one negative experience. This sentiment holds true for both new customers and returning shoppers. That’s scary – every encounter and experience matters and that’s why you have to pay attention to order accuracy.
How To Improve Your Order Accuracy Rate
Fortunately for your company, there are ways to start improving your order accuracy.
(1) Improving Inventory Management
Were you aware that the accuracy of your order picking is directly influenced by your inventory management process? In truth, the majority of inaccurate orders result from either a disorderly warehouse or insufficient inventory control, signifying a shortage of the required stock to fulfill incoming customer orders.
Your order management software (OMS) plays a key role in how effective your company is at managing inventory throughout all processes.
Our OMS here at Thill Inc. helps business owners manage inventory at all levels.
(2) Picking And Packing
As mentioned earlier, the majority of order processing errors occur during the picking and packing stages. Therefore, it is in the best interest of your brand to assess potential areas for improvement across your diverse distribution centers or fulfillment warehouses. Prioritizing these evaluations has the potential to substantially reduce your order error rates.
Similarly, ensure that your picking and packing process is thoroughly optimized within the broader scope of your fulfillment operations. Warehouse slotting, one of the widely adopted methods for optimizing picking and packing, essentially arranges inventory based on what makes the most sense for the picker. This may involve categorizing products by type, size, weight, and other relevant factors.
(3) Automate Your Systems
While we briefly discussed the significance and convenience of automation, it’s worth emphasizing once more. This is because automated software and fulfillment center technology have the potential to enhance your order accuracy almost immediately.
Employing an order management system or warehouse management system (WMS) stands out as one of the most effective methods to minimize the manual tasks involved in fulfilling customer orders. As you might anticipate, a reduction in manual work within your warehouse directly correlates with a decrease in the likelihood of encountering errors.
Fulfillment KPIs You Need To Track
There’s a number of fulfillment KPIs we recommend tracking, these include inventory turnover, return rate, average order value, order picking accuracy, and average shipping time.
Inventory Turnover Rate
Inventory turnover refers to the speed at which your inventory is sold or used and then replenished. A high inventory turnover generally indicates robust demand for your products, while a low turnover suggests declining demand.
One significant advantage of monitoring inventory turnover is its ability to gauge how effectively your company is handling its stock. Overestimating demand for a specific SKU, leading to overstocking, can result in low inventory turnover. Conversely, a high turnover rate may signal inadequate inventory levels to meet customer orders.
Return Rate
The return rate denotes the percentage of orders that customers return after purchasing. While returns can occur for various reasons, they often stem from order inaccuracies. For instance, if a customer receives an item in the incorrect size or color, they are likely to return it to your company.
While some errors result in exchanges, many customers may request a full refund when faced with a wrong order. In such cases, not only does your company lose the sale, but there’s also a risk of losing the customer due to frustration or disappointment with your brand.
Awareness of your return rate allows you to optimize returns management, enhancing satisfaction and potentially retaining a customer who might have otherwise been lost.
Average Shipping Time
The average shipping time represents the mean duration required to complete deliveries within a specified timeframe. To compute this metric, you divide the total shipping time by the chosen time unit, be it days, weeks, months, quarters, or years.
This specific Key Performance Indicator (KPI) assists in monitoring the efficiency of your supply chain and the effectiveness of planned delivery routes. Furthermore, average shipping time provides insights into the timeliness of deliveries, indicating whether they align with the scheduled timelines or if there are delays in fulfillment.
As you may be aware, dependable shipping times contribute to an enhanced customer experience. What might be less known is that shipping times also influence order accuracy. Given that order accuracy pertains to the consistency between customer orders and actual deliveries, shipping times are a crucial element in ensuring accuracy. Thus, for an order to be deemed accurate, it must be delivered to the correct address within the specified timeframe.
Average Order Value
Average order value (AOV) represents the average dollar amount spent by an individual customer on your website or mobile app. Precisely, AOV examines the average dollar amount of each order placed within a designated timeframe. This metric holds significant importance for ecommerce retailers, influencing decisions regarding advertising expenditure and product pricing.
The calculation of AOV provides the opportunity to scrutinize consumer behavior and gain deeper insights into the purchasing patterns of online shoppers. Armed with this information, you can make more informed decisions when forecasting, ensuring a consistent availability of the products your customers desire.
Order Picking Accuracy
Order picking accuracy (OPA) measures the frequency with which your shipments contain the correct goods and materials. To calculate OPA, you divide the total number of orders accurately picked and verified (prior to shipment) by the overall number of orders picked during the same timeframe, expressed as a percentage.
Determining your OPA provides an opportunity to pinpoint processes prone to errors and implement corrective measures to enhance this key fulfillment metric.
A diminished value for this KPI may indicate a need to refine your quality control standards or retrain employees in the appropriate picking procedures. Rectifying your OPA can significantly improve order accuracy, boost profitability, and foster customer retention for your brand.
How Thill Inc. Can Improve Your Order Accuracy
Our 3PL fulfillment team ensures that your sales orders are consistent and accurate. As your business expands and order volumes increase, the likelihood of human errors rises when relying on manual processes. However, by integrating an order management system, you can effortlessly receive and ship the correct products.
With Thill Inc., you can effortlessly create, optimize, and deconstruct bundles and kits into their essential components, track profitability on an SKU-by-SKU basis, and much more. Essentially, your sales, inventory, and analytics are all seamlessly integrated into a comprehensive dashboard, eliminating the need for error-prone manual entry and periodic data transfers.
Get started today here by reaching our team.
Thill Inc. a 3PL fulfillment company with more than 60+ years of experience. We offer a wide range solutions such as order fulfillment and order management to warehousing and returns management. Since 1959, we’ve helped thousands of companies throughout the world. With fulfillment centers throughout the United States, we can help you get your products to customers fast and accurately.
