Order Cycle Time: What It Is and How to Measure It

What is order cycle time?

Order cycle time refers to the total time it takes to fulfill an order, starting from the moment the customer places it to when it is delivered. This metric encompasses several stages, including order processing, picking, packing, and shipping.

Why is order cycle time important?

Order cycle time is important because it directly impacts operational efficiency and customer experience. A shorter cycle time ensures faster deliveries, which enhances customer satisfaction while reducing costs. For companies, this translates to a competitive edge in today’s fast-paced market. Businesses that consistently deliver quicker and more reliable service are more likely to retain customers and outperform competitors.

What are the key components of order cycle time?

There are four key components in order cycle time:

1. Order processing: Verifying orders, checking stock levels, and generating invoices must be efficient to prevent delays in the process.
2. Picking: Retrieving items from inventory can be time-consuming, but automation and barcode scanners can speed it up.
3. Packing: Optimizing packing stations and workflows ensures timely and accurate packing, reducing delays.
4. Shipping: Efficient labeling, sorting, and shipping automation can significantly shorten this final stage.

Optimizing each of these components leads to faster order completion, improved warehouse throughput, and happier customers. With shorter cycle times, businesses can boost their efficiency and deliver the seamless experiences customers expect.

A shorter order cycle time enhances customer satisfaction, loyalty, and repeat business. Fast deliveries lead to positive experiences and increased trust, while reliable service builds confidence and encourages customers to return. Optimizing cycle time also gives businesses a competitive edge, ensuring a seamless experience that sets them apart in the market.

How do you calculate order cycle time?

Calculating order cycle time is crucial for measuring efficiency and identifying areas for improvement. Here are four steps to calculate it:

1. Identify the start and end points: The start point is when the customer places the order, and the end point is when the order is delivered to the customer.
2. Record the time taken for each stage: This includes the time spent on order processing, picking, packing, and shipping.
3. Calculate the cycle time for individual orders: For each order, track the total time taken from the moment the order is placed until it reaches the customer.
4. Average the cycle times: To get a representative order cycle time, calculate the average of multiple orders over a specific period. For example, if it takes 120 hours to process 10 orders, the order cycle time would be 12 hours per order.

By consistently tracking and calculating cycle time, you can identify bottlenecks and take targeted actions to speed up the process.

How do you reduce and optimize order cycle time?

You can reduce order cycle time using a combination of strategic process improvements and advanced technologies. By streamlining workflows and adopting cutting-edge tools, you can significantly enhance efficiency and meet customer expectations for faster deliveries. Here’s how:

Streamline order processing

Simplify order intake and reduce manual steps by automating order entry and validation. This eliminates bottlenecks and human errors, ensuring faster and more accurate processing.

Optimize picking methods

Adopt efficient picking strategies to reduce the time spent moving between locations such as:

• Zone picking
• Batch picking
• Wave picking  

A well-optimized warehouse layout and flow further minimize delays during this stage.

Leverage automation and robotics

Automation tools, including robotic pickers, conveyors, and sorters, dramatically reduce manual labor and cycle time. Systems like AutoStore handle repetitive tasks efficiently, allowing workers to focus on more complex operations, which improves speed and precision.  

Use WMS

A powerful warehouse management system (WMS) acts as the backbone of warehouse operations by tracking orders in real time, managing inventory, and optimizing routing. When integrated with automation systems, WMS enables seamless communication between technologies and workers, reducing errors and speeding up the entire cycle.

Enhance packing efficiency

Standardize packaging methods or implement automated packing systems to cut down on packing time. Efficient packing also minimizes errors, reducing the risk of delays caused by rework or damaged goods.

Utilize barcode scanning and RFID

Technologies like barcode scanning and RFID tags ensure quick and accurate identification of products, reducing time spent searching for items and improving overall processing efficiency.

Incorporate AI & machine learning

AI and machine learning can forecast demand, optimize inventory levels, and determine the most efficient picking routes. By analyzing past data and making real-time adjustments, these technologies improve speed, accuracy, and adaptability in your operations.

Inventory management and its role in order cycle time

Efficient inventory management is key to reducing order cycle time. Properly organized and accurate inventory allows for quicker order fulfillment. These factors impact cycle time and can streamline fulfillment and speed up order processing:

1. Accurate stock levels
2. Real-time tracking
3. Just-in-time (JIT) inventory
4. Inventory optimization tools
5. ABC analysis
6. Warehouse layout optimization

{{cta1}}

Efficient inventory management lays the groundwork, but data and analytics take it further. By using real-time insights and predictive tools, you can fine-tune your processes and eliminate bottlenecks.  

Using data and analytics to track and optimize order cycle time

Data and analytics are key to improving order cycle time by offering actionable insights that streamline operations and boost efficiency. Here’s how data-driven approaches can help:

1. Real-time monitoring: Data tracking tools allow managers to monitor key performance indicators (KPIs) like order processing speed and picking accuracy, helping to identify issues and optimize cycle time on the spot.
2. Identifying bottlenecks: Analytics pinpoint delays in order processing, picking, or shipping. By highlighting these problem areas, warehouses can implement targeted strategies to improve efficiency.
3. Predictive analytics: By analyzing historical data, warehouses can forecast demand and optimize stock levels, reducing backlogs that could slow down order fulfillment.
4. Performance benchmarking: Comparing order cycle times with industry standards helps identify improvement opportunities and best practices to enhance efficiency.
5. Continuous improvement: Data-driven decisions lead to ongoing optimization, allowing warehouses to refine workflows, staffing, and technology to further reduce cycle times.

Data and analytics help identify inefficiencies, but automation takes it further by implementing real-time improvements. Automated solutions enhance visibility, speed up processes, and reduce cycle times.

How does AutoStore reduce order cycle time?

Here are five ways that AutoStore reduces order cycle times:

1. Goods-to-person technology: Robots retrieve Bins containing products and deliver them to people at workstations. This eliminates the need for workers to walk through aisles, significantly reducing picking time.
2. Intelligent inventory slotting: AutoStore uses SKU profiling and dynamic slotting to optimize where items are stored. Frequently picked items are placed a the top of the Grid where they are the most accessible.
3. Forecast mode & pre-positioning: AutoStore Robots can preposition Bins during off-hours or operational lulls. This means that when orders come in, the system is already partially prepared, reducing pick times and smoothing out workload peaks.
4. Seamless WMS integration: AutoStore is technology-agnostic. It integrates with any WMS to enable real-time tracking, inventory management, and routing optimization. This integration ensures that every step — from order receipt to dispatch — is streamlined and synchronized.
5. Compact, scalable design: The system’s modular design allows for dense storage and easy expansion. This not only saves space but also shortens the distance between storage and picking points, further reducing cycle time.

Real-world example

Dafiti

Facing rapid growth and scalability challenges, Dafiti — part of the Global Fashion Group — partnered with AutoStore and Bastian Solutions to create one of the largest and most advanced automated e-commerce warehouses in South America. Located in Brazil, the facility stores up to 3.6 million SKUs and is capable of handling 4,800 picks per hour. The AutoStore system implemented there reduced Dafiti’s order cycle time from 24 hours to just 2 hours — a 92% improvement.

“In addition to significantly improving customers' value proposition by increasing the speed of picking, we also enhanced the value proposition for the services we provide to our partners.”

-Philipp Povel, Dafiti Group Co-Founder

Conclusion

Reducing order cycle time is a game-changer for boosting efficiency and delighting customers. By fine-tuning each step — order processing, picking, packing, and shipping — businesses can streamline operations and deliver faster, more reliable service. Embrace automation, AI, and smart inventory management to stay ahead of the competition and meet growing customer expectations.

The quicker and more accurate your order cycle, the more satisfied your customers will be, setting your business up for long-term success. Ready to optimize? The tools and strategies are within reach!

FAQ

What is an example of an order cycle?

An example of an order cycle is a customer placing an online order, the order being processed, items being picked and packed, and then shipped and delivered to the customer.

What is order fulfillment cycle time?

Order fulfillment cycle time is the time taken to process, pick, pack, and ship an order from when it is placed until it reaches the customer.

What is order delivery cycle time?

Order delivery cycle time is the time it takes from when an order is shipped to when it is delivered to the customer.

How do I calculate cycle time?

Cycle time is calculated by dividing the total time taken for all orders by the number of orders processed.