What is Order Accuracy and Why You Should Care About It?Time to read: 6 minutes
Fulfillment is one of the most crucial aspects of eCommerce operations. Making sure your products go out to your customers properly can spell the difference between a repeat buyer and a bad experience.
Having strong logistics operations has been critical over the past two years. With COVID-19 delaying and crippling many companies’ supply chains, many have explored innovative ways of moving their products.
Customers are critical now about how and when they receive their packages. It’s essential that they get their packages fast, and that the products they receive are correct.
Receiving the wrong package is one of the leading customer complaints of shopping online. Giving consumers an incorrect order can lead to a negative experience. There’s also the possibility of losing more than half of your customers.
Handling orders appropriately is part of an effective logistics plan. To track this, order accuracy (OA) comes into play. Setting this as an actionable goal and a key performance indicator (KPI) helps you earn customer loyalty and a bigger bottom line.
Order Accuracy Explained
Order accuracy, also referred to as perfect order measurement, is the percentage of all online orders that are correctly processed and delivered to consumers. This number is compared to the total number of actual orders.
High OA means that your clients nearly always receive the exact items they’ve ordered in good condition. Errors affecting this KPI may be mispacked goods, wrong order quantity, and damage to the package.
Giving the wrong order ruins the unboxing experience. It could also be costly since you’ll need to put in additional time, effort, and money to fix it.
OA is a defining factor behind customer satisfaction. To calculate this, all you need is to follow this formula:
Order accuracy rate = (Total orders fulfilled accurately / Total orders fulfilled) * 100
As an example, let’s say your company shipped out a total of 100 orders last month. Out of those hundred, 10 were damaged in transit or delivered to the wrong address.
(90/100)*100 = 90%
So for the previous month, the order accuracy rate will turn out to be 90%.
A fulfillment supply chain is a complex network of systems, mechanisms, and people. Achieving a perfect OA rate of 100% would not be easy. Many unknown variables and factors happen daily that can affect deliveries. However, it is a good business practice to always strive for a perfect OA rate. Many sellers consider 96-98% a good range to hit consistently.
The number of incorrect orders, returns, failed delivery, and damaged goods impact your overall OA rate.
Why Order Accuracy Is Important
Initial customer interactions are important as it will affect the likelihood of consumers appreciating your items and how frequently they will repurchase them. Your OA rate will determine how much more willing a customer will support you long-term.
Negative experiences in other situations help illustrate the importance of a high OA rate. For example, you are unlikely to return to a restaurant after waiting long and receiving the wrong food.
This simple scenario shows that inaccuracy and errors can directly influence a customer’s lack of interest in repurchasing your product.
Maintaining accuracy when dealing with new and existing customers is crucial.
1. Deliver Positive Customer Experiences
Giving customers what they want results in memorable experiences. Customers in today’s online market are more loyal to companies that deliver outstanding experiences. Companies focusing on customer experience report that 86% of their customers are willing to pay more.
And if customers keep getting poor experience with your company, you can lose roughly 59% of your clients.
If you do not deliver products correctly to the customer or are incorrect in quantity, you will have to bear the brunt of negative feedback. This may cause you to lose out on existing customers. You will also have to arrange for RTO and pay an extra amount for processing and shipping. Therefore, tracking OA will help you analyze your fulfillment process and improve your order management.
2. Pinpoint Weakness in Your Processes
It will be easier to find flaws in your fulfillment process if you measure the OA rate. Patterns of reduced-order accuracy over time will be much more apparent and observable. In that situation, you can rapidly spot the gaps in your supply chain by scrutinizing each step and comprehending where a shortfall exists.
You can streamline warehouse operations and eliminate inefficiencies by learning how to cut down on unnecessary mistakes.
The added oversight will also make cutting costs and avoiding errors much easier. Reacting quickly to mistakes can be done if you track the right metrics. Business growth can be more sustainable when you’re sure all your products are being sent out properly and on time, opening the door for expansion.
3. Opportunities for Innovation
Rich insights come from tracking order accuracy. You can find more efficient ways to boost your order management when you have concrete proof of your actual performance. This data provides actionable experiences that help rationalize decision-making and future planning.
Implementing a Solid Order Accuracy Strategy
Continuously finding ways to optimize your order fulfillment process will help position your organization for future growth. When you’re having trouble keeping orders accurate, there are some best practices for improving your OA.
As a general guide, making sure your OA rate is high revolves around two ideals:
- Introducing effective workflows to lower the error rate
- Adopting cutting-edge technology to accomplish hassle-free automation
Here are a few typical methods you can implement for your business:
Set an Achievable Goal
Without clear direction, your OA rate can slip unnoticed. Make sure to set aside some time to consider how to optimize and improve it.
If you haven’t been keeping track of your order accuracy, you should start doing it as soon as possible. Accomplishing this allows you to see where your business stands right now. You can also decide whether or not it’s important to focus on increasing your OA.
As previously mentioned, any rate less than 95% is a disadvantage for your business and must be immediately addressed.
After determining your current OA rate, set a reasonable objective and deadline for your action items. Articulate the goal and how each team member can contribute to raising the rate clearly and concisely.
Review Picking & Packing Process
The picking and packaging stages of the fulfillment process are where most order processing errors occur. Be sure to take the time to assess areas for improvement throughout your distribution facilities to reduce error rates.
Collaborate with your warehouse staff, and seek input on how fulfillment procedures might be enhanced, optimized, or even automated. Streamlining your operations can eliminate frequent errors like selecting the incorrect color or size of related SKUs.
Consider zone picking, where employees can only source items from a specific section inside your warehouse or storage facility. You may also want to try warehouse slotting or the method of putting inventory in the most convenient place for the picker. It simplifies the picking and packing process by separating items by attributes such as type, size, weight, and other factors.
Improve Inventory Management
Supply chain management (and OA) is greatly facilitated by effective inventory management. With it you will always be aware of what you have on hand (and what you need).
Making sure your inventory is organized makes stock and items easier to find. Optimized arrangement of products greatly improves inventory management at your fulfillment or distribution center. This is especially helpful if you have products with several variations, such as various sizes or colors.
Another option is real-time inventory management software, which generates barcodes and SKUs for each item. It enables staff to scan things using smartphones or tablets to confirm they are holding the right one. It will also help maintain stock better and process incoming orders at a much faster pace.
Use Logistics and Fulfillment Technology
You can increase OA by using an automated system for order management. Processing and routing in your fulfillment supply chain are faster thanks to the system’s ability to connect with your online sales channel or marketplace. If the procedure is manual, there is a potential you will overlook a certain percentage of orders. This outdated approach will ultimately result in a lower order accuracy rate.
Relying on manual effort alone during the selection process could increase your risk for errors Order pickers also spend time going from one warehouse area to another, resulting in several unnecessary overhead costs. Fortunately, you can now use technologies like barcode scanners, conveyor belts, intelligent robots, and more to automate conventional warehouse tasks.
An order picker can focus on speed and accuracy thanks to automated operations and a warehouse management system (WMS). Software like this offers additional validations and quality checks at every stage of fulfillment.
You can put a WMS to give you complete real-time visibility into inventory levels and storage. You can even monitor worker productivity and fulfillment operations inside a warehouse.
One of the best methods to find processes to improve without having to perform manual warehouse audits continuously is via a WMS.
It’s crucial to ensure that your orders are accurate if you want to keep your consumers satisfied and coming back for more. Track and calculate your order accuracy rate to identify how error-prone your fulfillment process is. Ensure smooth fulfillment, prompt deliveries, and a satisfying customer experience.
With ZhenHub, tech-driven eCommerce fulfillment centers help your products get out to customers quickly and accurately. We simplify logistics for online retailers by providing complete visibility of your inventory, customer orders, and shipments. Access to our all-in-one logistics software solutions is as easy as signing up today.