What Is Fill Rate and How Do You Calculate It?

Are you losing 40% of your customers simply because your order delivery times are too slow? The B2B world has changed. Nearly 65% of your buyers are millennials – digital-first, ecommerce-savvy professionals who expect a buying experience that’s faster and far less complex than legacy B2B buying experiences. They want their orders fulfilled quickly and consistently. And they’ll change suppliers on a dime if it means better service. For manufacturers and distributors, this highlights a core challenge: maintaining a high fill rate to ensure timely and complete deliveries. 

The ability to meet demand promptly is vital for ensuring customer satisfaction and retention. Poor fill rates are unacceptable, leading to dissatisfied customers, lost sales, and damaged reputations. To avoid these ramifications, it’s critical to understand what fill rates are and how they are calculated. Read on to get the facts you need to improve your fill rate, boost customer satisfaction, and drive business success. 

What is Fill Rate?

Fill rate measures the percentage of orders a company can complete using its available inventory without running out of stock. It’s a key performance indicator that tracks how effectively a business can satisfy customer orders, providing insights into stock level optimization and supply chain efficiency. 

Why Is Fill Rate Important for Manufacturers and Distributors?

Fill rate is a critical metric because it is directly connected to customer satisfaction, revenue growth, and operational efficiency. A low fill rate means you are failing to meet buyer expectations by delivering orders late or failing to include all ordered products in your deliveries. This directly impacts your ability to grow and thrive as a manufacturer or distributor. In contrast, a high fill rate...

• Ensures customer satisfaction: Buyers come to you because they have a need. When you meet that desire smoothly, rapidly, and consistently, they are more likely to be satisfied with your services.
• Enables supply chain optimization: Analyzing fill rates helps identify and address supply chain inefficiencies.
• Boosts revenue growth: A higher fill rate means the ability to fulfill more orders, increasing sales and revenue.
• Optimizes operational efficiency: Monitoring fill rate can also lead to more efficient inventory and better supply chain management.
• Gives a competitive advantage: Buyers are always grateful to have their requirements met. Exceed their expectations with a superior fill rate, and they’ll be more than just thankful. They’ll give you more business. That’s how you carve out a competitive advantage.

The benefits of an optimized fill rate and streamlined ordering process are not just theoretical. Just ask Werner Electric Supply. By partnering with Conexiom, this electrical distribution company was able to transform its management of over 24,000 SKUs and dramatically improve its on-time delivery and customer satisfaction by shortening the average order cycle time from 3 days to 4 hours, also saving the company around 6,263 hours annually in manual data entry time.

Key Types of Fill Rate

A critical nuance of this metric is that it can be assessed in different contexts, each providing specific insights into inventory and fulfillment performance. Here are the key types of fill rate to be aware of:

• Order fill rate: Measures the percentage of orders completely fulfilled from available inventory.
• Line fill rate: Gauges the percentage of order lines fulfilled without backorders.
• Unit Fill Rate: Calculates the percentage of units ordered that are fulfilled from available inventory.
• Case fill rate: This applies to bulk orders, measuring the percentage of cases fulfilled.
• SKU fill rate: Focuses on fulfilling individual stock-keeping units (SKUs).

How Do You Calculate the Fill Rate?

Failing to accurately calculate fill rate can lead to poor inventory management, inefficient resource allocation, and damaged business relationships. To truly assess fulfillment performance and identify areas for improvement, you need to know the formula and steps for calculating fill rate:

Formula:

(Type of Fill Rate) = ((Type of Fill Rate) Shipped / Total (Type of Fill Rate) Placed) x 100

Steps To Calculate Standard Order Fill Rate:

1. Identify the total number of orders placed within a given period
2. Identify the number of orders in that same time that were delivered on time and in full (OTIF)
3. Divide the number of orders fulfilled on time by the total number of orders placed, and multiply the result by 100 to get the fill rate percentage.

Real-World Example:

Let’s look at how this formula plays out in the real world. Imagine a distributor that received 1,000 orders last month. Out of those, 950 orders were delivered on time and in full. The formula for calculating the fill rate is as follows:

 Fill rate = (950 order / 1000 orders) x 100 = 95%

In this example, the fill rate is calculated as 95%, indicating a high level of order fulfillment efficiency for the distributor. But what would this distributor do if its rate was lower and wanted to improve it?

6 Ways to Improve Your Fill Rate

Achieving a high fill rate requires a holistic approach involving several moving parts throughout your supply chain. Here are six ways to optimize your order fulfillment and increase customer satisfaction:

1. Optimize Inventory Management
   Implementing strategies to maintain optimal inventory levels is one of the surest ways to meet demand consistently. Regularly review inventory turnover rates and adjust stock levels based on purchase patterns. Apply just-in-time (JIT) inventory practices to minimize excess stock while ensuring you have enough products to meet customer needs promptly.
2. Enhance Demand Forecasting
   Use advanced forecasting techniques such as machine learning and predictive analytics to predict customer demand accurately. By analyzing historical sales data, market trends, and seasonal fluctuations, you can anticipate demand more effectively and plan inventory accordingly, reducing the risk of stockouts and overstocking.
3. Strengthen Supplier Relationships
   Building strong relationships with suppliers is essential for ensuring timely replenishment. Communicate regularly with your suppliers to align product schedules and delivery timelines. Establishing trust and reliability can lead to better terms, faster response times, and improved fill rates.
   
4. Automate Order Processing
   Reduce manual processes and improve efficiency with sales order automation. Implementing order management software can streamline order entry, reduce errors, and speed up the entire order fulfillment process. Automation ensures that orders are processed swiftly and accurately, enhancing overall fill rate performance.
   
5. Invest in Warehouse Management Systems
   Modern warehouse management systems (WMS) and automated storage and retrieval systems (AS/RS) can significantly enhance warehouse operations and improve fill rates. This technology enhances picking accuracy and speed up fulfillment processes. A well-organized warehouse is key to higher fill rates.
   
6. Improve Logistics Coordination
   Efficient logistics and transportation help ensure timely order fulfillment. Coordinate closely with logistics partners to optimize delivery routes and schedules. Take advantage of real-time tracking systems to monitor shipments and address any delays promptly. With effective logistics management, you can ensure that every product reaches your customers on time.
   

How Conexiom Helps Optimize Fill Rate

Maintaining a high fill rate is critical for successful supply chain management. In the modern B2B environment where Amazon and other online retailers are entering the B2B space with their own marketplaces, you cannot afford to continue relying on legacy workflows and manual processes. You need to digitalize your operations and provide better service than anyone else, including optimized fill rates. This is one of the best ways for manufacturers and distributors to create a competitive advantage and grow their businesses.

But you don’t have to try to achieve this alone.

Conexiom's advanced sales order automation solution can help. By digitally automating manual tasks, reducing errors, and supporting real-time data integration, you can ensure that your team has the data and information they need to deliver orders on-time and in-full (OTIF) on every occasion. Stop frustrating customers due to delays and errors, because of slow, manual order entry.  Instead, deliver exceptional customer experiences with an automation solution designed specifically to meet the needs of manufacturers and distributors.

With Conexiom, you get:

• Automatic order processing: Conexiom automates the capture and processing of sales orders, eliminating manual entry and significantly reducing associated errors.
• A closed digital order gap: Provides EDI-like and ecommerce-like benefits of processing speed, order accuracy, and staff efficiency with no changes required to how your customers buy.
• Enhanced data accuracy: Using advanced algorithms, Conexiom ensures near-perfect data extraction and validation accuracy resulting in 7-points greater order accuracy.
• Increased efficiency: Automating repetitive tasks allows for 26% higher on-time fulfillment and frees up valuable time for your team, allowing them to focus on more strategic activities.
• Improved customer satisfaction: Boost customer satisfaction and profitability for nearly all customers with rapid PO-backed order processing
• Scalable solutions: Conexiom's platform is designed to scale with your business, accommodating growing order volumes seamlessly.

Learn more about how Conexiom's intelligent order processing capabilities can support your growth and success.