Hi Tracey, Thank you for the insightful video. We are really looking forward to re-define our fill rate KPI to understand both customer satisfaction and supply readiness. Just wanted to know how should we treat the backorder qty in future fill rate calculation. Like suppose you have the stock/capacity of 100 units and in one day we have received 10 different orders for 600 total. Now my fillrate for today is affected but as per FIFO process my next 5 days new orders will also not be processed till the time I complete the first 600 orders. How should we use this info to better understand customer service.
You are correct in saying that the fill rate on the day you receive the 10 different orders for a total of 600 will be impacted since 500 units are not available to fill the remaining orders. Let’s call that Day 1. On the next day (Day 2), new orders for the same out-of-stock item will impact your fill rate since you can’t fill those orders until new stock of that item is available. The orders that you still cannot fill from Day 1 do not count in Day 2’s fill rate but they do remain in your backorder list. When stock becomes available for this item, you will need to have enough stock to fill all backorders and have enough left to keep that item from going out of stock again soon. Another useful thing to track is how old open orders are. For example, if an order had 5-line items and you managed to fill 4 line items, the order date will tell you how long the customer has been waiting for the one remaining item. However, I have seen some computer systems which remove open line items from the original order and place them on a new order so the original order can be closed and invoiced. In that case, it becomes difficult to get an accurate picture of how long a customer has been waiting since the new order for the backordered item is created on the date the first portion of the order is invoiced.
I'll be launching a private community soon to discuss the topics I post to RUclips. If you would like to receive notification of when it's launched (very soon!), feel free to sign up for my newsletter to receive more information. You'll be able to ask questions of me and other members to share ideas and knowledge. academy.numericalinsights.com/62112814-b325-43af-938a-ceaf007d4276
Hi Tracey, thanks for your video. We are looking at starting to measure DIFOTQ and am interested in your opinion. We are discussing weighting versus incident failure. For example, if we had 10 customers that had an average of 5 skus per customer so 50 line items/skus in total being sent, and we short delivered 1 sku to 1 customer, would that be IN FULL 90% (9 out of 10 customers correct) or would you view it as 98% (49 skus delivered IN FULL out of 50)?
Hello Ryan. I tend to measure both because they tell me two different things AND when you put both together, you can learn even more about what your inventory issues are. Here's an explanation. Using your example, when you have 10 ORDERS and 9 ORDERS ship complete, then 90% of customers were fully satisfied (assuming no quality issues or returns). For the measurement (9/10), it is a measurement of perfectly satisfying a customer. For the weighted measurement (49/50), that's essentially a LINE ITEM level measurement. This gives you an idea of how badly you miss the mark relative to a perfect order. Now, let's see what we can tell about our inventory when we look at both together. If your ORDER fill rate was, say, 75% but your LINE ITEM fill rate was 95%, it tells you that you often miss perfectly pleasing your customers BUT, you are rarely out of more than a few items. The other thing you can track is at the ITEM/SKU level. You can track which SKUs are out of stock for each customer order to see if it's frequently the same item that you're always missing. That would direct you to raising your predicted demand on that SKU or checking that your lead times are realistic when doing a safety stock and reorder point calculation. I hope that helps and feel free to join my free academy if you want to post questions or message me directly. ( academy.numericalinsights.com/numerical-insights-community ). I'll also be holding a seminar on safety stock and reorder points and what to consider on December 3rd ( academy.numericalinsights.com/inventory-planning-challenges-calculations-and-considerations ) Thank you for reaching out. Tracey.
I'll be launching a private community soon to discuss the topics I post to RUclips. If you would like to receive notification of when it's launched (very soon!), feel free to sign up for my newsletter to receive more information. You'll be able to ask questions of me and other members to share ideas and knowledge. academy.numericalinsights.com/62112814-b325-43af-938a-ceaf007d4276
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Thanks for sharing! You could put a video making both graphs from scratch. I didn't get how to write a measure and it works for period
Thank you so much! Amazing video ❤️
Thank you very much!
Hi Tracey,
Thank you for the insightful video. We are really looking forward to re-define our fill rate KPI to understand both customer satisfaction and supply readiness. Just wanted to know how should we treat the backorder qty in future fill rate calculation. Like suppose you have the stock/capacity of 100 units and in one day we have received 10 different orders for 600 total. Now my fillrate for today is affected but as per FIFO process my next 5 days new orders will also not be processed till the time I complete the first 600 orders. How should we use this info to better understand customer service.
You are correct in saying that the fill rate on the day you receive the 10 different orders for a total of 600 will be impacted since 500 units are not available to fill the remaining orders. Let’s call that Day 1. On the next day (Day 2), new orders for the same out-of-stock item will impact your fill rate since you can’t fill those orders until new stock of that item is available. The orders that you still cannot fill from Day 1 do not count in Day 2’s fill rate but they do remain in your backorder list.
When stock becomes available for this item, you will need to have enough stock to fill all backorders and have enough left to keep that item from going out of stock again soon.
Another useful thing to track is how old open orders are. For example, if an order had 5-line items and you managed to fill 4 line items, the order date will tell you how long the customer has been waiting for the one remaining item. However, I have seen some computer systems which remove open line items from the original order and place them on a new order so the original order can be closed and invoiced. In that case, it becomes difficult to get an accurate picture of how long a customer has been waiting since the new order for the backordered item is created on the date the first portion of the order is invoiced.
I'll be launching a private community soon to discuss the topics I post to RUclips. If you would like to receive notification of when it's launched (very soon!), feel free to sign up for my newsletter to receive more information. You'll be able to ask questions of me and other members to share ideas and knowledge. academy.numericalinsights.com/62112814-b325-43af-938a-ceaf007d4276
Hi Tracey, thanks for your video. We are looking at starting to measure DIFOTQ and am interested in your opinion. We are discussing weighting versus incident failure. For example, if we had 10 customers that had an average of 5 skus per customer so 50 line items/skus in total being sent, and we short delivered 1 sku to 1 customer, would that be IN FULL 90% (9 out of 10 customers correct) or would you view it as 98% (49 skus delivered IN FULL out of 50)?
Hello Ryan. I tend to measure both because they tell me two different things AND when you put both together, you can learn even more about what your inventory issues are. Here's an explanation.
Using your example, when you have 10 ORDERS and 9 ORDERS ship complete, then 90% of customers were fully satisfied (assuming no quality issues or returns). For the measurement (9/10), it is a measurement of perfectly satisfying a customer.
For the weighted measurement (49/50), that's essentially a LINE ITEM level measurement. This gives you an idea of how badly you miss the mark relative to a perfect order. Now, let's see what we can tell about our inventory when we look at both together.
If your ORDER fill rate was, say, 75% but your LINE ITEM fill rate was 95%, it tells you that you often miss perfectly pleasing your customers BUT, you are rarely out of more than a few items.
The other thing you can track is at the ITEM/SKU level. You can track which SKUs are out of stock for each customer order to see if it's frequently the same item that you're always missing. That would direct you to raising your predicted demand on that SKU or checking that your lead times are realistic when doing a safety stock and reorder point calculation.
I hope that helps and feel free to join my free academy if you want to post questions or message me directly. ( academy.numericalinsights.com/numerical-insights-community ). I'll also be holding a seminar on safety stock and reorder points and what to consider on December 3rd ( academy.numericalinsights.com/inventory-planning-challenges-calculations-and-considerations )
Thank you for reaching out.
Tracey.
nice
Thank you.
👍
Thank you, Nedal. I appreciate the thumbs up.
I'll be launching a private community soon to discuss the topics I post to RUclips. If you would like to receive notification of when it's launched (very soon!), feel free to sign up for my newsletter to receive more information. You'll be able to ask questions of me and other members to share ideas and knowledge. academy.numericalinsights.com/62112814-b325-43af-938a-ceaf007d4276