Order Management KPIs That Are Actually Worth Measuring

In the fast-paced world of B2B commerce, maintaining operational efficiency and best-in-class customer service can significantly impact a company’s bottom line. This necessity has led businesses to closely monitor their order management processes using Key Performance Indicators (KPIs). Effective order management ensures that the right products reach the right customers at the right time, which is fundamental to growing revenue and maintaining customer satisfaction.

Understanding order management KPIs and Benchmarks

Order management KPIs are quantifiable metrics that track and measure the efficiency and effectiveness of order processing and order fulfillment. These metrics are essential for assessing performance, identifying bottlenecks, and making data-driven decisions to enhance customer satisfaction and operational agility. By picking commonly used order management KPIs, you can track your company's performance over time, as well as benchmark against competitor metrics.

How to select the best order management KPIs

The selection of KPIs should be strategic and aligned with specific business goals. Not all metrics are KPIs; the latter are used to measure performance against set objectives, helping focus efforts on areas that truly drive business success. Sharing these KPIs within the organization can help create a culture of improvement and collaboration, leading to enhanced performance. The four main types of KPIs for order management teams are speed, quality, financial, and customer experience through the order process. 

Order management “speed” KPIs

Speed-based order management KPIs track how efficiently your order management system moves an order from initial receipt to confirmed promise and shipment. The benefit of choosing speed-based KPIs for order management are not just creating a faster cycle time, but improving accuracy, reducing bottlenecks, and freeing up staff to focus on higher-value customer service work.

Order Cycle Time

The Order Cycle Time KPI measures the it takes to fulfill an order from order placement to shipment, excluding delivery. A lower Order Cycle Time (OCT) shows that you have a more efficient order management process and healthy supply chain, which can significantly enhance customer satisfaction. 

The formula to calculate order cycle time is: 

Average Order Cycle Time (hours or days) = (Sum of [Shipment Timestamp − Order Receipt Timestamp]) ÷ Total Orders

Response Time (aka Time to Acknowledgement/Confirmation)

Response Time (RT) measures how quickly customer inquiries are addressed, which is becoming increasingly important as B2B order management expectations are shaped by B2C standards. Faster response time can improve customer experience and loyalty, making this KPI critical for maintaining brand reputation and fostering long-term relationships with customers. Order confirmations are an essential part of RT, whereby a company has received a request and gone through the process of ensuring they can ship by a specific delivery date. Production planning, engineering or other groups are sometimes needed to confirm an order, often creating delays and a lack of visibility for the customer. If quotes are not processed and distributed immediately, they could be filled by a competitor. If orders are not filled immediately, they risk being changed by the customer. 

The formula to calculate time to acknowledgement is:

Average Time to Acknowledgement (minutes/hours) = (Sum of [Order Acknowledgement Timestamp − Order Receipt Timestamp]) ÷ Total Orders

The role of AI in enhancing order management speed

Advancements in AI have revolutionized order management by automating key processes. AI-automation tools in order management processes help in recognizing and sorting orders, extracting, validating and processing information, and responding to customer inquiries swiftly, thereby reducing manual intervention and improving order accuracy and speed.

Order management “quality” KPIs

On Time In Full (OTIF)

OTIF tracks whether order are shipped in the correct quantity and delivered by the promised date.This metric assesses the ability of a business to meet delivery schedules with the correct items in the right quantities. High OTIF rates are crucial for customer satisfaction and can highlight inefficiencies in logistics and order fulfillment.

The formula to calculate OTIF is:

OTIF (%) = (Number of Orders Delivered On or Before Promised Date AND at 100% Fill ÷ Total Delivered Orders) × 100

Perfect Order Rate

Beyond meeting delivery promises, Perfect Order Rate also evaluates the order accuracy of documentation, labeling and invoicing, which are vital for smooth operations and effective cashflow management and helps suppliers avoid fines based on customer contracts which directly impact profitability and bottom line. 

During a recent Esker webinar, 26% of attendees indicated that their perfect order rate was below 85%. Order accuracy remains a primary KPI for many OM and Supply chain leaders as AI-powered automation tools improve the perfect order rate.

The formula for perfect order rate is:

Perfect Order Rate (%) = (Orders With Zero Errors in Entry, Picking, Packing, Documentation, Pricing, Damage, Returns, and Invoicing ÷ Total Orders) × 100

Claims/Write-offs

Organizations may track specific claims or write-offs tied to order quality. For example, if an order is shipped to the wrong location or delays cause the order to be expedited via next-day air, these financial impacts can all be tied back to the health of the order management process. 

The formula to calculate claims rate is:

Claims Rate (%) = (Number of Claims/Chargebacks from Order Errors ÷ Total Orders) × 100

Leveraging technology for order management quality

Automated solutions provide a “single pane of glass” view of the order lifecycle, offering real-time insights that help companies identify and address inefficiencies. This integration facilitates better decision-making and improves both On Time In Full and Perfect Order Rate.

Order management customer & employee satisfaction KPIs

Customer Satisfaction Score (CSAT) and Net Promoter Score (NPS)

These measure how well a company meets customer expectations and the overall customer perception, respectively. These scores are invaluable for understanding customer satisfaction and loyalty. 36% of polled webinar attendees indicated that NPS was their preferred way of measuring customer performance.

The formula for CSAT is:

CSAT (%) = (Number of “Satisfied”/“Very Satisfied” Responses ÷ Total Responses) × 100

While the formula for Net Promoter Score is:

NPS = (% Promoters [9–10] − % Detractors [0–6])

Wallet Share or Share of Wallet (SOW)

Share of Wallet is a KPI used to measure the percentage of a customer’s spending for a type of product or service that goes to a particular company. In the book Do B2B Better: Drive Growth Through Game-Changing Customer Experience, author Jim Tincher cites this metric as one that B2B organizations can focus on to determine how customer satisfaction can be tied to increase market share. 

The formula for calculating Share of Wallet is:

Share of Wallet (%) = (Customer Spend with Your Company ÷ Customer’s Total Category Spend) × 100

Employee Satisfaction (eSAT)

Employee satisfaction directly impacts customer service quality and operational efficiency. Satisfied employees are more engaged, productive and likely to provide better service, contributing to higher customer satisfaction and retention. A strong order management system reduces frustration, increases retention, and boosts productivity. 

To calculate employee satisfaction rate, you will need to conduct a survey, and qualify them as positive or negative responses. Once collected, the formula for employee satifaction rate is:

eSAT (%) = (Number of Positive Employee Survey Responses ÷ Total Responses) × 100

Order management financial KPIs

Cost to Serve

Cost to Serve (CTS), often measured as department budget % number of customer interactions, provides detailed insights into the costs associated with serving each customer and helps companies optimize resource allocation and improve profitability. Effective management of CTS is critical in times of external pressures such as supply chain disruptions and economic uncertainties. A high-touch environment typically increases CTS throughout the order-to-cash process.

The formula to calculate Cost to Serve (per order) is:

CTS per Order ($) = (Total Order Management Costs Attributable to Serving Orders ÷ Total Orders)

The impact of AI-driven automation on order management

AI-driven automation reduces the need for manual input from customer service and order management teams, streamlines processes and minimizes errors, which not only improves operational KPIs but also reduces costs associated with manual errors and inefficiencies. These technologies enable B2B companies to provide a seamless, B2C-like experience, which is increasingly expected by B2B customers.

From an employee perspective, less time spent on tedious, low-value tasks means team members can transition from order takers to “customer concierge” roles — taking on everything from upselling and account management activities to planning and order fulfillment which helps better manage allocation while setting more realistic customer expectations. Having a third-party AI solution also enhances visibility for management roles so that staffing requirements can be truly understood and better decisions on staffing and work allocation can be made. 

Conclusion

Monitoring and optimizing order management KPIs is essential for any business looking to improve its supply chain and customer service functions. Strategic selection and application of order management KPIs, combined with AI-assisted automation solutions, can lead to significant improvements in efficiency, customer satisfaction and profitability. Businesses must continually assess and align their KPIs with their strategic goals to ensure they remain competitive and responsive to customer needs.