Delivery Cycle Time
Delivery cycle time, also known as order cycle time, is the total time from when a customer places an order until the product is delivered to the customer. This is a key performance indicator (KPI) in supply chain and logistics management, as it directly impacts customer satisfaction and can affect a company’s competitive position.
Delivery cycle time includes several stages:
- Order Receipt and Entry: The time it takes to receive, record, and process the customer’s order.
- Order Picking and Packing: The time it takes to locate the ordered items in a warehouse, gather them, and prepare them for shipping.
- Order Shipping: The time it takes to transport the order to the customer.
- Delivery: The time it takes from when the product reaches the customer’s location until it’s in the customer’s possession.
Companies strive to minimize delivery cycle time in order to improve customer satisfaction, reduce inventory holding costs, and improve cash flow. It can be reduced through various methods such as process improvements, better inventory management, improving supplier relationships, and effective use of technology.
It’s important to note that while fast delivery is often beneficial, companies also need to balance speed with cost and the risk of errors. For instance, rushing orders might lead to mistakes in picking and packing, which could result in returns and damage to the company’s reputation.
Example of Delivery Cycle Time
Let’s consider an example using an online retail business:
- Order Receipt and Entry: A customer places an order for a product through the company’s website. The order is received and processed within an hour.
- Order Picking and Packing: The product is located in the company’s warehouse and prepared for shipment. This process takes 24 hours.
- Order Shipping: The product is shipped to the customer. Assuming standard shipping, this takes 3 days (72 hours).
- Delivery: The courier delivers the product to the customer’s doorstep. This process takes a few hours, but for simplicity, let’s consider it as part of the shipping time.
In this scenario, the delivery cycle time would be the sum of the times for each stage, so 1 hour (order receipt and entry) + 24 hours (order picking and packing) + 72 hours (order shipping) = 97 hours total.
Now, imagine the company finds a way to reduce the order picking and packing time to 12 hours by improving warehouse operations. This would reduce the delivery cycle time to 85 hours, which could significantly improve customer satisfaction and give the company a competitive edge.
This example illustrates how delivery cycle time is a key performance indicator for businesses, especially in sectors where fast delivery is a competitive advantage, such as e-commerce. It also shows how businesses can work on improving different parts of the process to reduce the overall delivery cycle time.