Posted in Operations and Supply Chain Terms, Total Reads: 326
Definition: Perfect Order
Perfect order is a measure that truly captures what is happening in your business and how satisfied your customers are with your firm’s performance. The Perfect Order is a measure that uncovers how great a business is getting along. The estimation of the Perfect Order estimation is without equivalent in finding out a company‟s general capacity to meet their business objectives and goals.
Perfect order is achieved through increasing the visibility across the inventory supply network. Perfect order goals are achieved by taking on manageable projects that yield discernible upgrades without tipping the scale on implementation cost
The Perfect Order is a order conveyed to a client that is finished, precise, on time and in flawless condition. A Perfect Order is accomplished when a client can contact the organisation, place a request for an item in an opportune way. It has the item accessible when they need it, at the value they are willing to pay, has it conveyed when they need it without harm and has the capacity to pay the receipt with no issues.
The higher perfect order rates usually carry less stock, experience shorter money to-money process durations, and have altogether less stock-outs than their rivals. Imperfect orders lead to expanded work costs for delivery, the need to give substitution item, and lower income because of lost deals and clients. By minimizing imperfect orders, companies can achieve prominent efficiencies and expand consumer loyalty.
The Perfect Order Measure calculates the error-free rate of every phase of a Purchase Order. This measure should capture every progression in the life of an order. It measures the errors per order line. If a high percentage of your orders are perfect, the hypothesis goes, you will have upbeat clients who will pay the organisation by ordering more.
For example: In a order, there exist an average of 5 errors per 1000 order lines in the entry. The warehouse pickup accuracy is very high of 99%. There is only 2% error margin in the delivery time. Assuming damage-free delivery in 98% situations, the perfect order is calculated as follows.
The Order Entry Accuracy: 99.5%
Warehouse Pick Accuracy: 99%
Delivered on Time: 98%
Shipped without Damage: 98%
Therefore, the Perfect Order Measure is 99.5% * 99% * 98% * 98% = 94.6%