What is Order Cycle?
An order cycle is an average time required to ship an order from the time it was placed by the customer. This time frame may change depending on the kind of product or service ordered. The logistics needed in an order cycle might also impact the timeline.
Significance of Order Cycle in E-commerce Logistics
Management of an order cycle gives an idea about inventory stocking, restocking, etc. Other reasons why an order cycle is significant are:
- Improves customer satisfaction: Customer satisfaction may be positively or negatively influenced by an order cycle. Companies should aim to have a quick order cycle time to help fulfill deliveries flawlessly.
- Efficient supply chain management: You can easily detect the delays in your order cycle, subsequently optimize the errors and run your business operations efficiently. This also aids in handling orders of bigger volumes.
Pre-requisites for Order Cycle and How It Works
Specific requirements should be fulfilled in order to manage an order cycle. Some of them are as follows:
- Improved warehouse flow
- Setting up an order cycle
- Analysis of the order cycle results
- Implementation of the results in the next order cycle
Subsequently, the order cycle time can be calculated using the formula:
Delivery Date – Order Date / Total Orders Shipped
Use Case With Order Cycle
Suppose a company has been working on an order cycle of 10 days for a particular product for many years. However, with better technology and more efficient staffing, the order cycle can now be reduced to 5 days. Therefore, the company will establish this new and efficient order cycle to ensure optimized management.