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How to Optimize Your Company’s Fill Rate

If you are reading this, there are high chances that you are operating with an inventory management system or maintaining a full inventory. It would be best if you understood the importance of having a demand satisfaction rate to manage your resources and gain insights about your customers. 

Here, you will find crucial information regarding fill rate and how to optimize it. 

What Is Fill Rate?

Essentially, the fill rate is the percentage of the orders you ship immediately from the available stock without missing a sale or placing backorders. Backorders are orders that customers make to receive later due to the current shortage of supply. 

To determine your fill rate percentage, you divide the order already shipped in full by customers’ total orders. You then multiply the result by 100 to convert it into a percentage. 

Importance of the Fill Rate

No matter the industry you operate in, you require measurements and metrics to determine your success. For that reason, the chain management niche has the metric to measure customer satisfaction. Your fill rate demonstrates your company’s effectiveness in meeting customer demand.

The following are reasons you need to care about the fill rate.

  • It is a warning- Low fill rates serve as a warning that you are losing sales and money due to lack of stock and could lead to disloyalty among consumers. 

For instance, if your fill rate is 50%, it means that only half of the orders made were shipped. In other words, you just left the money on the table. 

Therefore, having fill rate statistics, you can understand your performance and make the necessary changes immediately. 

  • It affects the relationship with clients- If you make your customer wait for deliveries; they are likely to opt for a different provider. The move would affect your company’s reputation and profitability while benefiting your competitors. 

The availability of products and your trustworthiness are factors that build strong ties between you and the customers. 

  • It demonstrates your data and inventory management- Having a 100% fill rate means that you make data-driven decisions rather than resting on approximates. 

Notably, your internal management activities directly influence your sales opportunity. Therefore, if you maintain a perfect fill rate, you should expect a high reputation and growth for your company. 

The practical ways to customize your company’s fill rate include;

  • Investing in forecast- SaaS tools are designed to manage your inventory and make forecasts for your company. The software will help you know the products that sell easier and quicker, hence informing you when to order with suppliers and filling gaps. 
  • Avoiding selling out-of-stock goods- You should check the product’s availability before offering missing products to customers. 
  • Offer alternatives- In most cases, you can quickly offer options to a product based on the resources available and customer preferences. However, it might be difficult to find an alternative for specific products that are hard to replace. 

If you are stranded on what to do with the demand satisfaction rate, you should incorporate inventory management software. These tools are easy to implement and offer ultimate solutions when it comes to the satisfaction rate.  

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