Difference between revisions of "RS1"

Latest revision as of 14:48, 10 June 2017

The Order Cycle Time metric (OCT) measures the average time required to fulfill customer orders; demonstrating the speed at which the company can satisfy demand.

Calculation

where

• Delivery Date = The date/time the order was delivered and accepted by the customer or the customer's agent at the agreed delivery point. Example agreed delivery points include: Pickup (EXW), Departure Port (FCA, FAS) or Vessel (FOB), Destination Port (CPT, CIF, CFR, DAT) or Customer (CIP, DAP, DDP)
• Order Date = The date/time the order was submitted by the customer
• n = Total number of orders or order lines delivered

Unit of measure: Days (Calendar days)

Importance

Companies with shorter Order Cycle Times are more responsive to customer orders. Longer lead times may ultimately result in customer dissatisfaction and competitive disadvantage. Order Cycle Time is considered less relevant to Make-to-Stock supply chains, these generally put more emphasis on improving Fill Rates.

Notes

The impact of planning processes on Order Cycle Time is limited; Order Cycle Time is typically measured for MTO and ETO supply chains, where planning is mainly focused on establishing capacity. Planning will have a direct impact on Order Cycle Time if or when capacity is or becomes the primary constraint.

Make-To-Stock (MTS) supply chains typically measure Order Fill Rate, as Order Cycle Time may underemphasize the scale of product shortages.

Alternative names include: Order Fulfillment Cycle-time. Order-to-Cash

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