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Order Cycle Time

The Order Cycle Time metric (OCT) measures the average time required to fulfill customer orders; demonstrating the speed at which the company can satisfy demand.

Calculation

Order Cycle Time
=
n
Σ  (Delivery Date – Order Date)
i=1
n
where:
  • Delivery Date = The date/time the order was delivered and accepted by the customer or the customer's agent at the agreed delivery point. Example agreed delivery points include: Pickup (EXW), Departure Port (FCA, FAS) or Vessel (FOB), Destination Port (CPT, CIF, CFR, DAT) or Customer (CIP, DAP, DDP)
  • Order Date = The date/time the order was submitted by the customer
  • n = Total number of orders or order lines delivered
Unit of Measure: Days (Calendar days)

Importance

Companies with shorter Order Cycle Times are more responsive to customer orders. Longer lead times may ultimately result in customer dissatisfaction and competitive disadvantage. Order Cycle Time is considered less relevant to Make-to-Stock supply chains, these generally put more emphasis on improving Fill Rates.

Notes

The impact of planning processes on Order Cycle Time is limited; Order Cycle Time is typically measured for MTO and ETO supply chains, where planning is mainly focused on establishing capacity. Planning will have a direct impact on Order Cycle Time if or when capacity is or becomes the primary constraint.

Make-To-Stock (MTS) supply chains typically measure Order Fill Rate, as Order Cycle Time may underemphasize the scale of product shortages.

Alternative names include: Order Fulfillment Cycle-time. Order-to-Cash

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Hierarchy

IDNameLevelx
RSResponsiveness0RS
RS1Order Cycle Time1RS1
RS11Planning Frequency2RS11
RS12Deliver Cycle Time2RS12
RS13Make Cycle Time2RS13
RS14Sourcing Cycle Time2RS14

Process(es)

IDNameLevelx
PPlan1P
P1Plan Supply Chain Operations2P1
P2Plan Source2P2
P3Plan Make2P3
P4Plan Deliver2P4
SSource1S
S2Source-to-Order2S2
S3Source-to-Engineering-Order2S3
MMake1M
M2Make-to-Order2M2
M3Make-To-Engineering-Order2M3
DDeliver1D
D1Deliver-From-Stock2D1
D2Deliver-to-Order2D2
D3Deliver-To-Engineering-Order2D3
D4Deliver Returns2D4

Term(s)

IDNameClearx
CIPCarriage and Insurance Paid To (Destination)CIP
CPTCarrier Paid To (Destination)CPT
CFRCost and Freight (Destination Port)CFR
CIFCost, Insurance and Freight (Destination Port)CIF
DDPDelivered Duty Paid (Destination)DDP
DAPDelivered at Place (Destination)DAP
DATDelivered at Terminal (Destination or Destination Port)DAT
DRPDistribution Requirements PlanningDRP
DRP-IIDistribution Resource PlanningDRP-II
EXWEx Works (Origin)EXW
FASFree Alongside Ship (Departure Port)FAS
FCAFree Carrier (Carrier)FCA
FOBFree On Board (Departure Port)FOB
MRP-IIManufacturing Resource PlanningMRP-II
MRPMaterial Requirements PlanningMRP
O2COrder-to-CashO2C
Order Cycle Time Responsiveness 21000 1 Responsiveness, Order Cycle Time, Cycle-time, Lead-time, Supply Chain The average time required to fulfill customer orders; demonstrating the speed at which the company can satisfy demand