Fill rate, sometimes called inventory fill rate, tracks the percentage of orders filled without delay or cancellation. It's an important business metric that helps measure a company's operational performance and customer satisfaction levels. This metric is especially critical in eCommerce businesses—if you're trying to win over customers and keep them loyal, your fill rates need to be rock solid. We'll dive into the fill rate and how it can help you get ahead in the competitive retail market today!
What is a Fill Rate?
Fill rate calculates how much product a business has sold in proportion to what it has on hand. This number is essential for retailers because it can indicate how likely customers are to find the product they are looking for on the shelves.
A low fill rate might mean that products need to be restocked more often, which could lead to lost sales. A high fill rate might mean that the store needs to run out of stock quickly, which could lead to unhappy customers. In either case, business owners need to know their fill rate and take appropriate action to ensure that they are providing what their customers want.
Types of Fill Rate
There are many types of fill rates. The various order fill rates are as follows-
Order fill rate
The fill rate measures how many orders you fulfill without backorders or stockouts. The order fill rates show the successful completion of orders for your business.
Line fill rate
Line fill rate is the percentage of line items filled for the different order lines the business has to fulfill.
Case fill rate
The case fill rate is the order fulfillment rate used by wholesale joints and distribution points. The volume of products sent out in orders is larger and calculated by cases. Case fill rate denotes the number of filled cases the distributor manages to send as opposed to the order demands.
How To Calculate The Fill Rate?
The fill rate formula is a straightforward formula that you can use to calculate the fill rate. The order fill rate is the number of orders fulfilled as opposed to the number of orders placed by your customers. You divide both the figures and then multiply them by 100. Keeping the count of the orders sent is very important for this calculation. The higher the fill rate, the more successful the eCommerce store is in its operations.
Here's how to calculate the fill rate-
Fill rate = orders fulfilled/orders placed x100
Related: How to Calculate Cost Per Unit
Factors That Affect Fill Rate
1) The product itself. Some products are more difficult to fill than others. For example, products with a lot of nooks and crannies (like a chocolate bar) are more difficult to fill than one solid piece (like a candy cane).
2) The packaging process. If the packaging process is slow or inefficient, it will take longer to fill the product and result in a lower fill rate.
3) The line speed. The faster the line speed, the more products can be filled in a given time. So if you have two lines running at different speeds, the line with the higher speed will have a higher fill rate.
Inventory management and analytics, therefore, are a massive part of the fill rate factors that affect order fulfillment. Another factor that you should take into consideration is supply chain management. For example, you can fulfill more orders faster if the delivery chain works correctly. When you have multiple delivery points and a strong delivery workforce, you will have a better fill rate than other businesses.
On the other hand, the fill rate is also affected by the supply of products. The time for restocking high-demand products should be low and easy to complete. You must identify high-demand products in your inventory and maintain the supply flow to meet the demand.
All these factors can affect the fill rate, so it's essential to understand the operation and ensure all processes are optimized for maximum efficiency. This will ensure that you have a high fill rate and minimize waste.
Importance Of Fill Rate For Businesses
Fill rate is a crucial metric business of all sizes should understand and track. Fill rates measure how quickly an order is filled or delivered to the customer, providing a valuable indicator of efficiency and level of service. A high fill rate indicates that orders are consistently processed promptly and customers receive their goods more quickly. This helps business owners gain consumer trust, build stronger customer relationships, and increase sales numbers and overall satisfaction levels.
On the other hand, low fill rates can result in unhappy customers, lost sales opportunities, damaged reputations, and higher costs for the company due to failed shipments or restocking fees. To ensure your business operates at maximum efficiency, it's essential to regularly monitor your fill rate, identify problems, and develop solutions.
Accurate inventory management processes are essential for keeping fill rates up. This includes maintaining good data on the availability of products, understanding customer demand, and predicting future needs. Additionally, businesses should automate replenishment processes to reduce manual labor and run more efficiently. Doing so can improve customer service levels, increase order accuracy and boost sales numbers in the long run.
Strategies For Improving Fill Rate
There are many ways to increase the supply chain fill rate. For example, you can increase the fill rate with the help of automation implementation at the inventory level. If the inventory supply and order fulfillment is automated, it will run smoothly. This can help you maintain a steady fill rate. Inventory management and warehouse operations should be closely monitored and enhanced. When the processes involved with inventory management and warehousing are improved, the supply chain fill rate also improves.
Related: How to Keep Track of Orders Small Business
Frequently Asked Questions About Fill Rate
What is a good fill rate percentage?
A fill rate of 85 to 95 percent is a reasonable fill rate. However, your business should aim at fulfilling orders at a 97 to 99 percent rate.
Can the fill rate be more than 100?
No, the fill rate can be at most 100 percent.
What is the difference between service level and fill rate?
Service level percentage is the percentage of the product replenishment cycle that fulfills ongoing customer demand. The fill rate is different because it deals with your inventory.
What is the difference between a fill rate and an inventory turnover?
Inventory turnover is the ratio that shows the management of inventory and its use compared to the cost of goods sold to customers. The fill rate is calculated as the percentage of orders fulfilled from the current inventory stock that the business has. Both data analyze the success of the eCommerce supply chain.
What are some common causes of a low fill rate?
Bad inventory analytics and management, delays in order delivery, low stock of products, and a broken supply chain are common causes of low fill rates.
What are some standard fill rate metrics?
There are many fill rate metrics like SKU fill rate, Line count fill rate, value fill rate, and case fill rate, which you have to look at when estimating the fill rate.
Fill rate is an important metric to track when managing inventory and forecasting customer demand. By understanding fill rate, how to measure it, and what factors impact it, you can ensure your business is always meeting customer needs and expectations. If you need help fulfilling orders, Simpl Fulfillment provides on-demand warehousing and shipping solutions to improve your fill rate – and boost your bottom line. Contact us today to learn more about our services.
Recommended: Backorders vs. Out of Stock- Things to Know About Keeping Items Available