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Getting to Grips with Retail KPIs: Processing Cost per Order

Getting to Grips with Retail KPIs: Processing Cost per Order

Hey and welcome to Retail 90 my name is
Tom and today we’re getting in to grips with an important retail KPI – Processing
Cost per Order. First things first, if you’re wondering what I mean when I say processing cost per order then this is a KPI that measures how efficient your
order processing is in relation to your revenue. To do this you need to total up
relevant fixed and variable costs divided by your total number of shipped orders in a month. This will tell you how much it’s costing you to ship your orders out of the door aka your processing cost per order. As a very simple example, say you spent $13,000 on warehouse rent and salaries
last month and another thousand dollars on packaging while shipping a total of
2,000 orders – this would give you a processing cost per order of $7. When tracking this metric you need to make sure that the number is always
decreasing as you fine-tune and improve your processes here are my thoughts and
what you could try: This requires listing all of the SKUs required for a batch of orders as opposed to using an order by order list. Your order management system
should be able to do this for you and with this in place your staff are able
to select multiple items across many orders at once meaning that finding
items in your warehouse becomes much more time efficient. You could integrate your various carriers with your warehouse system and have packing notes sent to them automatically. This removed the time that would normally be spent on logging individual shipments on couriers portals or websites. A key part of improving processing cost per order is to cut costs wherever possible with automated workflows in place orders that meet your requirements – ie fully paid can
be sent straight to the warehouse team to pack and ship thus reducing the need
for someone to be manually fulfilling and sending orders to them. Over to you now, what are some things that you do to reduce your processing cost per order?

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