Short and sweet: Fill Rates

Fill rate is an alternative term for delivery readiness. While in German the term Lieferbereitschaft is mainly used, in English the term Fill rate is more commonly used. A distinction must be made between unit fill rates, item fill rates, line fill rates and order fill rates.

The Unit Fill Rate key figure measures the effectiveness of the fulfillment of stock units on request. It indicates the percentage of the requested units that could actually be delivered from stock. For example, if 100 units of a product are requested, the unit fill rate is 95% if 95 units are immediately available.

The line fill rate refers to the number of order lines (order items) in an order that can be completely fulfilled. If an order contains five order items (five order lines) and four order items can be delivered in the required quantities, the line fill rate is 80%.

The item fill rate must be clearly distinguished from the unit fill rate. It measures the percentage of stock-keeping units (SKUs) in demand that are in stock. In contrast to the unit fill rate, which relates the quantity available per item to the quantity demanded, the item fill rate only asks what percentage of SKUs are currently in stock. It does not matter whether there is 1 or 100 units of this item in stock or whether the demand for an item is “0” or “infinite”. If 980 out of 1000 items in stock are in stock, the item fill rate is 98%.

The order fill rate ultimately indicates the percentage of customer orders that can be completely fulfilled. Whether a customer order comprises only one order item or 1000 is not taken into account. Understandably, the higher the average number of order items in customer orders, the lower the order fill rate. If 63 out of 100 customer orders can be delivered in full, the order fill rate is 63%.

Fill rate is an alternative term for readiness to deliver. There are four different fill rates, which are shown in this mind map.

Our tip:

A clean statistical setting of the readiness to deliver can only be achieved at the unit fill rate level. This is also the key figure that is stored in the material master data of many ERP systems as the target value for the readiness for delivery of a stocked item.

In many industries, the item fill rate still plays a major role if the other types of fill rates cannot be calculated. The exact quantity of demand for items in online stores or retail stores is not known. Customers who cannot find a product in a retail store or do not find it in the desired quantity usually do not report their need to anyone. Similarly, with online stores it is difficult to recognize whether customers have a specific need for an item that they are viewing or are “just having a look around”, as boutique customers often do. If no demand for article quantities, order items or customer orders can be determined, the only remaining parameter is to evaluate the percentage of stocked articles with inventory.

While a rough statistical correlation between unit fill rate, line fill rate and order fill rate can be determined from empirical data, an item fill rate cannot be placed in a statistical relationship to the other fill rates.

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Picture of Prof. Dr. Andreas Kemmner

Prof. Dr. Andreas Kemmner

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