The perfect order is a very useful measuring stick for the retailer and manufacturer to measure performance. According to AMR Research, “the perfect order is the ability to produce orders that are complete, accurate, and on time.” Research estimates a 3% improvement in perfect order performance will increase profits by 1%.
Elements of the perfect order
- On time
- Damage free
- Accurate documentation
Calculating the perfect order
Many organizations multiply together the scores for each element to calculate a composite score. Therefore, if pick accuracy is 99.2%, on time delivery is 97.2%, shipped without damage is 98.7%, and 99.8% are invoiced correctly, the perfect order measure would be 94.9%.
The perfect order provides a single value key performance indicator (KPI) which can be easily measured. It’s like a stop light – red, yellow, or green. You immediately know how your organization is performing. Managers should be careful, however, to review each individual element to have a complete and accurate view of performance.
The ability to sense and react to demand is a key driver of perfect order performance. Which is why more and more vendors are asking for POS and inventory data from their retail customers, so they can better understand demand with as little latency as possible.