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These new opportunities make it more important than ever to improve warehouse efficiency<\/a> and decrease time spent on getting goods to customers. That\u2019s why eCommerce success today depends largely on two key metrics: order lead time and order cycle time\u2014and there are specific ways to minimize both.<\/p>\n In this article, we\u2019ll first look at the characteristics of order fulfillment lead time and order cycle time and the importance of having short shipping lead times. <\/strong>Then, we\u2019ll break down real-world methods in which you can improve these parameters for improved business outcomes.<\/p>\n <\/p>\n Contents<\/p>\n Order lead time and order cycle time are two important warehouse KPIs<\/a> that often get confused with each other. Order cycle time is the average time between any two orders shipped. For example, Order cycle time formula, if your company ships 1000 orders in 8 hours, the order cycle time is (8 hours * 60 min * 60 sec) \/ 1000 = 28.8 secs\/order. This means you ship orders at an order cycle time of every 28.8 secs.<\/p>\n Meanwhile, order lead time is the average length of time that passes between a customer placing an order and the order is shipped. Order fulfillment<\/a> lead time is calculated like this:<\/p>\n (time order is shipped from the warehouse \u2013 time order is placed by the customer) \/ (total number of orders shipped)<\/strong><\/p>\n The below table shows statistics for a Logiwa customer’s cycle time improvement. The average Logiwa customer improves order cycle time by 30% within 3 months after implementing Logiwa WMS.<\/p>\n Lead time can also be broken down into different parts. For example, between the date the order is placed to the date of delivery, several events can occur. The customer\u2019s preferred<\/em> order lead time might not exactly match the quoted<\/em> order lead time. Next the confirmed<\/em> order lead time might differ from the quoted order lead time. Finally, the actual<\/em> order lead time might also vary due to unforeseen delays.<\/p>\n For this reason, many companies might offer a range of dates for order delivery as well as order tracking for the customer to be able to follow the package\u2019s progress.<\/p>\n The \u2018Why\u2019 of Order Lead Time Reduction<\/strong> The study also found that 67% of online shoppers are willing to pay more money to get same-day delivery if they need the package by a deadline, such as a birthday. Also, 47% of those surveyed would pay more for same-day delivery simply because they want their package sooner.<\/p>\n This highlights two real business benefits to lead time control and reduction:<\/p>\n Before we learn how to improve your internal warehouse order lead time, it\u2019s also important to consider your supply chain order lead time. No matter how efficient your warehouse picking and packing <\/a>system is, if you don\u2019t have optimal supply chains in place, both order lead time and order cycle time will suffer.<\/p>\n To minimize supply chain order fulfillment lead time, some areas you can focus on include:<\/p>\n Work with your suppliers to optimize key supply chain components (e.g. manufacturing, transport, warehouse processing, etc.).<\/p>\n Now let\u2019s take a look at some specific strategies to reduce your order lead time to improve workflow and customer satisfaction.<\/p>\n It might seem like common sense for warehouse pickers to know how to get from point A to point B. However, for larger warehouses with a variety of SKUs, picker pathways can become highly complex. This can result in pickers walking extra miles which negatively impacts order fulfillment lead time and also increases worker fatigue and injury risk.<\/p>\n Some ways to minimize picking walking paths include warehouse layout optimization<\/a> and picking up various items along the way. Still, even these strategies have their limitations as the number and variety of orders increases. In fact, several advanced strategies and computer algorithms are now used by companies to optimize warehouse walking paths<\/a>.<\/p>\n An average picker walks 6-8 miles a day if you don\u2019t optimize the walking path. Logiwa can decrease this number by at least 26%.<\/p>\n Another way to reduce order lead time is to create different groups for single item orders, identical item orders, and multi-item orders. For each group type, you can apply a separate operation which reduces the time to pick and pack the orders. For example:<\/p>\n Don\u2019t fall into the temptation to generate super long pick lists thinking it will save time. First of all, large batches take more time to pick. As a rule of thumb, the total batch duration should not be over one hour. Plus, the room for error grows with batch size. Also, it works better if you have separate batches for large and small items.<\/p>\n When a new supply of goods arrives, workers place the stock on storage shelves (putaway). The most logical putaway locates the goods so they can easily be located and shipped off quickly. Where exactly a good winds up when it enters a warehouse impacts how efficient the warehouse picking and packing processes<\/a> will be.<\/p>\n For more efficient picking, you can revise and optimize your putaway rules. For example, you can put not similar products into the same location, so that the picker finds the correct SKU <\/a>easily. You can also put popular, fast-moving products into easier to reach locations.<\/p>\n Directed putaway takes this one step further by using warehouse software (WMS) which directs workers exactly to where incoming inventory should go. This makes everything more organized, and items are easier to find later.<\/p>\n Increase your picking efficiency by 30% with a proper Putaway process in place.<\/p>\n Minimizing errors during the picking process is essential. If an incorrect item is picked, this can easily double the picking time component of order lead time.<\/p>\n One way to reduce picking errors is by keeping track of mistakes. This allows you to systematically identify problem spots and make corrections. Plus, all items should be clearly marked, and similar items or packaging should have an easy way to differentiate them, such as by color-coding. Some larger warehouses might even put similar items far apart from each other to minimize confusion.<\/p>\n Another strategy is to keep the pick lists <\/a>simple and orderly. The grouping strategy we mentioned earlier can help with this. Plus, don\u2019t let your pick lists get too long as this can also cause confusion or missed items. In a similar manner, SKUs that all look alike should be avoided. Make things as easy as possible to distinguish.<\/p>\n A proper stock replenishment process<\/a> in place helps ensure you never have stock-outs on the picking locations. A demand-based replenishment algorithm constantly checks orders to calculate replenishment quantities. A solid replenishment process includes:<\/p>\n You need to find ways to reduce the order cycle time especially when you are experiencing high volume increases. In many cases, order cycle time variables overlap with order fulfillment lead time factors.<\/p>\n As we mentioned earlier, shorter, well-organized pathways and optimized warehouse design are critical to minimizing picking time and maintaining worker health. Your overall order picking model can also make a big impact. Some examples are:<\/p>\n Any delay in label generation will increase order cycle time. Overall, label generation depends on the following factors:<\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.22.2″ _module_preset=”default” width=”auto” custom_margin=”15px|auto|15px|auto|false|false” custom_css_main_element=”.hbspt-form .legal-consent-container a {|| color: white !important;||}” locked=”off” global_colors_info=”{}” global_module=”26788″ theme_builder_area=”post_content”][et_pb_column type=”4_4″ _builder_version=”4.22.2″ _module_preset=”default” use_background_color_gradient=”on” background_color_gradient_stops=”#481a96 0%|#200741 100%” custom_padding=”15px|35px|15px|35px|true|true” border_radii=”on|10px|10px|10px|10px” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_text _builder_version=”4.22.2″ _module_preset=”default” header_3_text_color=”#ffffff” header_3_font_size=”30px” header_3_font_size_tablet=”30px” header_3_font_size_phone=”20px” header_3_font_size_last_edited=”on|phone” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n [\/et_pb_text][et_pb_code _builder_version=”4.22.2″ _module_preset=”default” text_orientation=”center” global_colors_info=”{}” theme_builder_area=”post_content”]\n
How Is Order Lead Time Calculated? How Is Order Cycle Time Calculated?<\/h2>\n
![\"CYCLE](\"https:\/\/f.hubspotusercontent30.net\/hubfs\/3469233\/Images\/Emails\/Blog\/CYCLE%20TIME-old-new%20-tinified.jpg\")
<\/strong><\/p>\nOrder Lead Time Components<\/h3>\n
Reducing Order Lead Time<\/h3>\n
In this day and age of instant gratification, on time, fast delivery is everything. In fact, one study<\/a> showed that 87% of shoppers determine that order delivery cycle time is a key factor in whether to shop with an eCommerce brand again.<\/p>\n\n
How To Optimize A Supply Chain\u2019s Order Lead Time<\/h2>\n
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How to Reduce Order Lead Time<\/h2>\n
Minimize the Walking Path<\/h3>\n
Group Different Order Profiles Properly<\/h3>\n
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Limit Picking Batch Size<\/h3>\n
Directed Putaway<\/h3>\n
Minimize Picking Errors<\/h3>\n
Smart Replenishment<\/h3>\n
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Reducing Order Cycle Time<\/h2>\n
When to Reduce Order Cycle Time<\/h3>\n
Methods to Reduce Order Cycle Time<\/h3>\n
Improve Order Picking Processes<\/h4>\n
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Improve Label Generation Processes<\/h4>\n
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Request a free demo to learn more about Logiwa WMS.<\/h3>\n