Fill rate

What is the fill rate?

The fill rate is the percentage of demand that can be satisfied by the current inventory without any backorders, lost sales, stockouts or other kinds of delays.

A high fill rate indicates that the business is able to fulfill customer orders quickly and efficiently, which can lead to higher customer satisfaction, repeat business, and positive word-of-mouth referrals. On the other hand, a low fill rate indicates issues with inventory management or supply chain that must be addressed in order to improve order fulfillment and customer service.

What are the types of fill rate?

There are several types of fill rate:

• Line fill rate: This measures the percentage of customer orders that are shipped complete with all ordered items on the same shipment.
• Order fill rate: This measures the percentage of customer orders that are shipped complete with all ordered items shipped together, even if they are shipped on multiple shipments.

How is the fill rate calculated?

The formula is pretty simple: divide the number of orders that were shipped by the total number of orders placed and multiply by 100 in order to get it in percentage:

Fill Rate = (Total Orders Shipped ÷ Total Orders Placed) * 100

Let's look at an example

Three orders have been placed with a total of 10 watches split by seven on the first order, two on the second and one on the third. The inventory is 9 watches. Thus, the fill rate is 90%.

To achieve a perfect order rate, the fill rate should be as close to 100% as possible. On average, businesses maintain a fill rate of about 85%-95%, but you should, ideally, strive for a fill rate between 97% and 99%.