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Order Fulfillment Cycle Time (OFCT): Definition & Measurement

Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

Nobody likes to wait, but did you know some businesses actually track wait time? It's a metric known as Order Fulfillment Cycle Time. In this lesson, you'll learn more about this supply chain measurement.

Order Up

You've been on the other side: You log on to your favorite website and order that great new release that just came out this morning. You place your order and check your email for your receipt. A few days later, you get notification that your item has shipped. Two days after that, your brand new purchase is waiting for you in the mailbox when you get home from work.

You've also been on the other ''other'' side: You log on to that same website and add that hot toy of the moment to your cart as a Christmas gift. You check out and get your receipt. A few days later, your item still has not shipped. The following day, you get a notification that your shipment is delayed because your item is on backorder. It's looking like it'll be close to two weeks before your item makes it to the mail and to your doorstep.

From a customer's perspective, the cycle of ordering, shipping, and waiting for delivery is all part of the process while shopping. For business, this cycle is known by a more formal name: Order Fulfillment Cycle Time, or OFCT. This key performance indicator is a critical measurement in business operations for supply chain efficiency.

What is OFCT?

OFCT is a measurement of time. It tracks the amount of time it takes when a customer orders an item to when they receive it. For customers, this may translate into time spent waiting in a fast-food drive-thru line, for example, or after placing an online order.

Customers today are increasingly likely to expect short wait times and quick delivery of their purchased item or service. For businesses, measuring OFCT can help identify waste and inefficiencies in manufacturing, production, and delivery programs. Because it tracks the amount of time from when a customer clicks ''Buy'' to when they have taken delivery of their purchase, it is a calculation of the end-to-end process. Businesses that track this metric can identify problem areas and improve its processes.

The calculation for Order Fulfillment Cycle Time requires the addition of every part of the order fulfillment process. As an equation, it looks something like this:

Source Time + Production Time + Delivery Time = Order Fulfillment Cycle Time

This takes into account the time the order is placed, including manufacturing, sourcing, production, processing, delivery, and any other step until receipt. This performance indicator correlates closely to customer satisfaction. Why? Because shorter wait times on the customer's side generally lead to higher rates of satisfaction. It means the business is doing its best in manufacturing, processing, and getting the product into the customer's hands quickly.

OFCT in Action

Let's take a look at a real-life example of where this metric might fit.

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