Order Cycle Time

"Time is the scarcest resource, and unless it is managed, nothing else can be managed." -Peter Drucker

What is Order Cycle Time?

Order Cycle Time refers to the Order processing process. The processes of taking the order from the customer and delivering it to the customer are excluded from this.

The purpose of Order Cycle Time Tracking is to shorten this time as much as possible and to respond faster to internal/external customers, as well as to reveal the disruption points in the process more clearly.

Generally used in the manufacturing sector, Takt Time and Lead Time.

Order Cycle Time measures the time it takes to process an internal/external customer's order. This includes the supply of goods required for production and production.
Takt Time only measures the production process.
Lead Time measures the time needed from the internal/external customer's order to delivery.

Graphic: https://blog.packsend.com .au/order-cycle-time

Benefits of Shortening Order Cycle Time

Higher Increased Customer Satisfaction:Fast order processing and delivery times increase customer satisfaction and encourage customer loyalty.
Inventory Management and Cost Reduction: Short order cycle time can reduce inventory costs because less inventory will be needed.
Competitive Advantage: Faster delivery gives the organization a competitive advantage and can help it stand out in the market.
Higher Customer Satisfaction: Fast order processing and delivery times enable internal/external customers' orders to be fulfilled quickly, increasing satisfaction and encouraging customer loyalty.
Improve Inventory Management and Control: Short Order Cycle Time is important to improve inventory management and control. Faster order processing times enable better tracking and management of stocks.
Financial Advantage: Short Order Cycle Time, less inventory and less waiting time reduce operating costs. This relieves the institution financially.
Production and Planning Improvement: Order Cycle Time can be used to improve production and planning processes. It ensures that products are produced on the required schedule. (See: JIT - Just in Time and JIS – Just In Sequence)
Continuous Improvement: Order Cycle Time can be used as part of continuous improvement efforts. Businesses can become more efficient by constantly monitoring this period and applying improvement strategies.
Risk Reduction: Faster delivery enables unexpected delays and issues in supply chain processes to be quickly addressed. This helps businesses reduce risks.

What are the Risks of Shortening Order Cycle Time?

Stock Shortage: Shortening the order cycle time too quickly may result in insufficient stocks. This may lead to difficulties in fulfilling orders and customer dissatisfaction.
Operational Challenges: Rapid processing and delivery of orders can create operational challenges. This process may need to be managed and well planned in terms of labor, equipment and logistics.
High Operational Costs: Shortening the Order Cycle Time requires faster work. This may increase the operational costs of the business. Additional costs such as urgent transportation or employment of additional personnel may arise, especially for fast delivery.
Supply Chain Issues: There is a risk that other players within the supply chain (suppliers, carriers, subcontractors, etc.) may not be able to keep up with expediting the process. This can lead to supply chain incompatibilities.
Quality Control Issues: Rapid delivery processes can complicate quality control processes or cause them to be overlooked. This may result in poor product or service quality.
Fluctuations in Customer Demand: Shortening order cycle time may require becoming more sensitive to fluctuations in customer demand. This can lead to resource waste due to demand imbalance. (See: Bullwhip Effect (Whiplash) , Whipsaw) )
Need for Sufficient and Accurate Information: Accurate data and information are needed to optimize order cycle time. This information can be difficult to access or analyze accurately.
Business Process Reorganization: Reducing order cycle time may require business process reorganization (Business Process Re-Engineering). This may encounter resistance within the organization.
Customer Expectations: Fast delivery and short order cycle time can raise customers' expectations. Therefore, it can be difficult to consistently provide this level of service.
Technology and Infrastructure: Technology and infrastructure investments may be required to accelerate processes. These investments may increase costs.