What exactly is order cycle duration?
To measure efficiency, the order cycle time is used. This tells you how long it takes for customers to receive their finished product after placing an auto dealer order.
Order cycle time is the amount of time it takes for a customer to get the part they want. However, if the customer is coming in for service, order cycle time will be the time it takes to get their vehicle fixed after they drop it off. These situations are not ideal because you can’t control the order cycle and it may take auto dealer longer for the service department to repair the vehicle. The order cycle time can be improved by being able provide parts quickly and accurately to your team.
Your customers will experience a better customer experience and you will see more referrals, return visits and higher revenues if your order cycle is shorter. Too long order cycles can lead to customer dissatisfaction, more complaints and a decrease in customer loyalty.
A key indicator of supply chain problems is a slow order cycle.
You may need to examine your supply chain for inefficiencies if you experience a slow order process. Perhaps it takes too long for your parts department to process requests and receive them. Perhaps the receiving process is too complicated or results in mistakes that can take time to correct.
You may also find that your inventory is not well-organized making it difficult to find parts. Or, your inventory records are incorrect or incomplete.
How to calculate the order cycle time
- The following equation is used to calculate the order cycle time:
- Order Cycle Time = (Delivery date – Order Date)/Total orders shipped
Keep in mind that if you have many specialty orders for large projects, it will impact your order cycle time.
You can organize your orders according to job types to reduce your average order cycle time. You can calculate the average order auto dealer cycle time for specialty projects, and then again for jobs that require regular maintenance.