The average actual cycle time consistently achieved to fulfill customer orders. For each individual order, this cycle time starts from the order receipt and ends with customer acceptance of the order.
Calculation
[Sum Actual Cycle Times for All Orders Delivered] / [Total Number of Orders Delivered] in days Data collection
Data for the components that are used to drive the calculation of responsiveness are taken from the Source, Make and Deliver process elements.
Discussion
The order fulfillment cycle time as captured from the moment a customer places the order to the moment the order is fulfilled is considered to be a 'gross' cycle time. It represents all the time passed between these two events, regardless of whether this represented cycle time for the activities performed by the organization to fulfill the order (both value-add and non-value-add) or dwell time because the order was placed well in advance by the customer. As such, this gross order fulfillment cycle time does not truly reflect the responsiveness of the organization. Take for example an organization that needs six days to fulfill a certain customer order. If the customer places the order one day in advance, the gross order fulfillment cycle time will be seven days. If the customer places the order 3 months ahead (pre-ordering), the gross fulfillment cycle time will be 96 days. However, the fact that the customer pre-orders does not reduce the responsiveness of the organization. On the contrary, one can argue that it may increase the ability of the organization to meet that order as it allows the organization to plan ahead and fulfill the order in a more optimal way.
The responsiveness of the organization is determined by the cumulative cycle time for all activities that are required to fulfill the order, but should exclude any dwell time where no activity takes place.
Therefore the definition of Order Fulfillment Cycle Time consists of a 'gross' component and a 'net' component named Order Fulfillment Process Time, according to the following formula Order Fulfillment Cycle Time = Order Fulfillment Process Time + Order Fulfillment Dwell Time. Note that dwell time will equal O for companies who do not utilize this metric, so Order Fulfillment Cycle Time will equal Order Fulfillment Process Time.
Order fulfillment dwell time is defined as 'any lead time during the order fulfillment process where no activity takes place, which is imposed by customer requirements'. Note that this dwell time is different from 'idle time' or 'non-value-add lead time', which is caused by inefficiencies in the organization's processes and therefore ultimately under responsibility of the organization. This kind of idle time should not be deducted from the gross order fulfillment cycle time.
Dwell time is mostly associated with the ordering process, where a customer may place an order in advance to reserve capacity/materials etc., but where the actual steps in the order fulfillment process take place later on. It is also common in the delivery process where the organization may be in principle ready to ship the product/service, but is requested by the customer to wait (for example to follow a certain shipment schedule).
Note that for those organizations where dwell time does not play a role, the dwell time can be taken as zero days which results in the net order fulfillment cycle time to be equal to the gross order fulfillment cycle time.
For benchmarking purposes it is recommended to use the Order Fulfillment Process Time, as this is the cycle time reflecting most accurately the responsiveness of the organization. It will also ensure
1.2.1
RS.1.1
Order Fulfillment Cycle Time
that those organizations in industries where dwell time is a factor can be benchmarked against organizations in industries where dwell time does not play a role.
The concept of dwell time applies not only to the level 1 metric, but also to all lower level metrics.
This means that each lower level metric can have a gross component, consisting of the net component and dwell time. Because the lower level metrics are hierarchical (the cumulative sum of cycle times at level 2 or 3 should be equal to the cycle time at level 1.) The cumulative sum of dwell times at level 2 or 3 should total up to the dwell time at level 1.
RS.2.1 Source Cycle Time RS.2.2 Make Cycle Time RS.2.3 Deliver Cycle Time RS.2.4 Delivery Retail Cycle Time
SCOR Supply Chain
sP1 Plan Supply Chain
sP2 Plan Source
sP3 Plan Make
sP4 Plan Deliver
sP5 Plan Return
sS1 Source Stocked Product sS2 Source Make-to-Order Product sS3 Source Engineer-to-Order Product
sM1 Make-to-Stock
sM3 Engineer-to-Order
sD1 Deliver Stocked Product sD2 Deliver Make-to-Order Product sD3 Deliver Engineer-to-Order Product sD4 Deliver Retail Product
sSR1 Source Return Defective Product sDR1 Deliver Return Defective Product
sSR2 Return MRO Product
sDR2 Deliver Return MRO Product sSR3 Source Return Excess Product sDR3 Deliver Return Excess Product
BP.138 Theory of Constraints Practices
Processes Hierarchy
RS.1.1
Order Fulfillment Cycle Time
BP.016 Supply Network Planning BP.021 Sales and Operations Planning BP.035 Business Rule Review
BP.086 Supply Network Planning BP.153 Bar coding/RFID
BP.165 Convergence of SCOR with Lean and Six Sigma BP.168 Rotable Spares Pool
1.2.3