A Comprehensive Guide to Supply Chain Metrics - Fill Rate

I would like to introduce the metric that tracks and measures how efficiently it delivers goods to customers. Fill rate is the percentage of customers’ orders that are filled on their first shipments—an important contributor to customer satisfaction. It’s also a measure of your company’s efficiency. Use this formula to calculate fill rate:  

• • • Fill rate = (1 – [(total items – shipped items) / total items]) x 100 

You can also track specific aspects of fill rate, including: 

• • • Order fill rate: The percentage of orders delivered on the first attempt. 
    • Line fill rate: The percentage of order lines delivered on the first attempt. 
    • Unit fill rate: The percentage of individual items delivered on the first attempt. 

Calculate all three by substituting them into the fill rate formula. The purpose is to measure of inventory effectiveness in meeting demands. The latter is calculated as the total units in stock and available against the total units ordered by customers over a period of time. Currently, there is no standard report that provides this information, but the above data can be calculated by creating a custom Transaction Saved Search. Here are the steps: 

1. 1. 1. -Navigate to Reports>Saved Searches>All Saved Searches>New 
      2. -Select Search Type = Transaction 
      3. -Navigate to Criteria tab>Standard subtab>Filter column and add the following filters: 
         1. 1. Type = is Sales Order 
            2. Account Type = is Income 
            3. Main Line = is false 
            4. Tax Line = is false 
            5. Shipping Line = is false 
            6. Status = none of; Sales Order: Billed, Sales Order: Cancelled, Sales Order: Closed, Sales Oder: Pending Approval, Sales Order: Pending Billing 
            7. Date = is within today 
            8. Navigate to Results tab>Columns subtab>Field column and add: 
      4. Field: Formula (Percent) | Summary Type: Sum | Formula: round(sum(nvl({quantitycommitted},0))/nullif(sum(nvl({quantity},0) - nvl({quantityshiprecv},0)),0),4) 
      5. Hit Save & Run button 

• • • Please note if you want to calculate the Fill Rate % per Item or per Customer; navigate to Results tab>Columns subtab>Field column and add Item or Customer, set the Summary Type: Group under Results tab>Sort By: select the latter field added (either Item or Customer if calculation will be based by customer) 

• • • Please note that since there is no field available that can be pulled through a Saved Search that stores historical data pertaining to either the Quantity Back Ordered or Quantity Committed of an Item; the system can only calculate the Fill Rate % relative to the current date.  This is the reason why in the search a filter is set for the Date field: is within today 

Why is the fill rate important? 

In supply chain management, demand satisfaction rate comes as one of the most essential metrics to follow, pointing out how effectively you meet the consumer demand. And that’s not by chance that this metric is also known as demand satisfaction rate. What are some other reasons to care about your fill rate?

1. 1. 1. It affects the relationship between you and your consumer – Do you meet the needs of your consumers immediately or make them wait? Or even worse – make them go to your competitors? Or you have positioned yourself as a reliable partner who is all-set to satisfy market needs? Your trustworthiness and availability of your products are strong factors to build long-lasting relations with your partners/customers and increase their loyalty level. 
      2. Shows how well you manage your inventory and use data – Are you a professional manager who is good at working with data and relying on it for long-term business gains? That’s all about your internal management activities that directly influence your sales opportunities. If you can make data-driven decisions instead of resting upon approximate calculations, you can expect stable business growth and a high reputation. 
      3. Warns you that you are losing sales & money because of understock (if your rate is low) – Your fill rate is 50%. What does this mean? Your customers placed 100 orders and you shipped only 50 of them! You just left money on the table. With fill rate statistics at hand, you will become aware of missed opportunities and take steps to manage them immediately. What is the ideal fill rate and how to improve it? 

The higher your order fill rate, the better. On average, companies manage to keep their FR at around 85-95% and the best-performing companies reach up to 98-99%. If you can provide 100% accuracy, that’s a great job but it’s not always that a high percentage is a positive sign and a low percentage – a negative one. What’s your demand satisfaction rate and how are you going to improve it? If you want to learn more about how Netsuite and WMS can help your distribution business, contact Concentrus today to discuss your needs. 

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