The so-called Perfect Order Fulfillment stands for the perfect degree of fulfillment of the delivery service. The degree of fulfillment describes the customer requirements for the delivery itself. In order to achieve a high degree of fulfillment, the following key figures are collected: Compliance with delivery dates, delivery reliability, delivery quality and delivery flexibility.
The goal of Perfect Order Fulfillment is applied in business logistics. It is a combination of all the above-mentioned and evaluated key figures in order to evaluate the degree of fulfillment or the logistics segment of thesupply chain as a whole, for example in percent.
Perfect Order Fulfillment stands for the performance of a provider of logistical and in some cases manufacturing services, quantified by the quality perceived by the customer.
Perfect Order Fulfillment: Measuring the corresponding key figures
In order to do justice to an informative quantification of key figures, companies must assess their processes involved in perfect order fulfillment and filter the necessary information from them. Possible sources for a high quality survey are, for example:
- Bookings of payment transactions
- Entries from a personnel management system (payroll accounting, personnel resource planning, time management)
- Information from production data acquisition (order progress, order status, times, quantities)
- General customer data from ERPor CRM (finance, resources, sales, marketing, master data)
- Data records of warehouse stocks of a warehouse management system
- Tracking information of the CEP service provider/delivery (DHL, Hermes)
- Comments in the online shop
- Customer e-mail traffic
- Social media
Example: If customers complain that deliveries from e-commerce are regularly delivered too late, the responsible quality manager should check the tracking information of the CEP service provider. In conjunction with the customer’s incoming payments and information on the order itself (e.g. incoming orders), detailed conclusions about late delivery are already possible.
The following key figures form the degree of fulfillment of the delivery service
- Delivery time, service time: The time between placing the order (dispatching, ordering) and handover (delivery) to the customer
- Delivery reliability: This includes adherence to delivery dates and deadlines, ability to deliver and thus the probability of how exact the supplier’s promise of a delivery date (notification) is for the delivery.
- Delivery condition, delivery quality: Condition of the delivery – in addition to article and product condition, this also includes the type and quantity of the goods (see also inventory management).
- Delivery flexibility: customer friendliness, fulfillment of customer wishes, personal customer contact, offer of different services (payment options, delivery method).
Order fulfillment along the production, logistics and sales
The perfect degree of fulfillment can also be measured in relation to the service providers involved in production, logistics and sales. This is the case, for example, in the production of the iPhone. Apple usually orders large quantities of the required batteries from LG or another supplier; the displays come from Sharp, Samsung and LG, among others. If the individual parts are not in stock in China in the quantities ordered, production of the smartphone will most likely come to a standstill. As a result, promised delivery commitments to the points of sale, including the end customer, are cancelled or postponed.
Reasons for the bottlenecks in order fulfillment
- Planning and coordination errors on the part of the client
- Production volume too large for suppliers
- Faulty production processes
- Incorrect order
- Great demand
Lack of delivery service
If a component of the delivery service is given as a so-called performance promise, but not implemented in practice, this is referred to as a lack of delivery service. Exceeding delivery times with trading partners or manufacturing customers leads to high costs and production losses – recourse claims and migration to competitors are the consequences.
Outsourcing of services
The degree of fulfillment of the delivery service is nowadays also dependent on the assignment (awarding) of company services. In the case of outsourcing, the company hands over internal services (production, storage, delivery) to external companies or service providers. This means that the company awarding the contract does not need to make future investments, for example in a larger distribution center. At the same time, the concentration on the core business is increased. However, outsourcing requires additional control processes. For example, if a CEP service provider does not meet the agreed delivery times, the customer will not report his recourse claims to the CEP service provider, but to the contracted partner.
Summary
Perfect Order Fulfillment has become a serious competitive factor today. In addition to low costs, quality of the goods/services, delivery reliability, delivery flexibility and the degree of fulfillment of individual customer requirements are important key figures for the customer. Perfect order fulfillment ultimately facilitates the customer’s purchasing decision for the next purchase.
Further information on order fulfillment can be found in the article “Last mile logistics in e-commerce – challenges and solutions“.
Image rights: Dennis Skley / CC BY-ND 2.0
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