Out of the many types of eCommerce businesses you can start, wholesaling (see what is wholesale) offers one of the widest ranges of product flexibility. Learning how to become a wholesaler and how to run a wholesale business means you can choose which wholesale items to sell and the type of wholesale directory you want to be listed in.
Successfully running a B2B business requires diligence in multiple areas. You’ll need to know how to get a wholesale license, how to find vendors, and what kinds of products sell well. This includes researching how to buy wholesale, including various high demand products. Experiences you don’t want from partners include slow supplier response times or failing to provide requested information.
As you expand your wholesale marketing plan and strategy, you’ll be looking for ways to make more wholesale sales. Utilizing professional inventory management and increasing sales over time includes maintaining a strong fill rate.
Let’s look at what fill rate is, how you can achieve a high fill rate, and why you want to.
Fill Rate Definition: What Is Fill Rate?
The definition of fill rate is the percentage of customer orders you’re able to meet without running out of stock at any given time. A strong fill rate is at or near 100%, meaning you’re able to fulfill all of the wholesale sales you make without stockouts, backorders, or lost sales.
Using the fill rate formula simplifies inventory forecasting, which is the process of using historical data to assess future inventory needs. A low fill rate indicates not enough stock or poorly organized inventory, whereas a fill rate higher than 100% could indicate ordering too frequently.
Your business’s fill rate percentage can also be used to spot the bullwhip effect in supply chain. The bullwhip effect describes how changes in demand at the end of the supply chain lead to differences and alterations throughout the rest of the chain.
Greater or lesser demand at the customer level of the supply chain can quickly lead to an altered fill rate. By noticing this quickly, you can adjust your purchasing habits to reduce financial losses.
Calculating your fill rate periodically allows you to spot weaknesses in your supply chain. If one of your suppliers has chronically long lead time, you’ll notice faster than if you ran a manual check. Addressing the issue right away increases your fill rate and ensures customers are happy.
Your fill rate also clarifies whether your current reorder point is working well. Your reorder point is the pre-defined interval at which you order new stock. Getting a reorder point right is critical for preventing delayed shipments and maintaining profit.
If you’re in the early stages of your business and find that customer demand is somewhat volatile, it doesn’t hurt to keep some safety stock on hand. This is a separate section of inventory that you can tap into if you experience an order surge or supplier delays.
Order Fill Rate
Order fill rate is the percentage of total orders that have been completely fulfilled. You can use this formula to check daily operational efficiency, assess the demand of various products, and evaluate supplier relationships. Your business’s order fill rate can point to discrepancies like whether or not employees are efficiently unloading stock, packing them on time, or making ill-informed buying decisions.
Fill percentage the percentage of confirmed orders that can be fulfilled at any time without resorting to backordering. It is often used interchangeably with fill rate.
Warehouse Fill Rate
Warehouse fill rate is the same concept as order fill rate but applied in the context of a warehouse. In warehousing, managers strive for as close to a 100% fill rate as possible. Less than 100% means there are more orders than stock to fulfill them, and more than 100% means inventory isn’t being purchased or managed efficiently.
Line Fill Rate
Line fill rate is the percentage of order lines completely filled out of the total number of order lines. An order line is any individual line item on an order bill. As an example, you could have 6 orders out of a total 12 order lines. Once multiplied by 100, this gives you a line fill rate of 50%.
Case Fill Rate
Case fill rate is the number of product cases initially shipped as a percentage of all cases ordered. A case fill rate can apply to both inbound cases for a warehouse as well as outbound cases for distributors and carriers.
This formula is used by warehouse managers and staff to calculate and adjust operational efficiency. For example, if you sold 50 cases of wine but were only able to ship 40, your case fill rate for that day is 80%.
Vendor Fill Rate
Vendor fill rate is the number of vendors who have delivered confirmed orders as a percentage of all vendors. Calculating this percentage is useful for determining the reliability of vendors in order to improve business decision-making.
What Is Fill Rate in Supply Chain?
Fill rate is the number of orders that can be fulfilled at any given time without resorting to backorders or stockout. It’s useful for determining how effectively and quickly your business is getting orders to customers.
The fill rate calculation is used near the end of the supply chain, as fill rate can only be calculated by knowing confirmed order numbers. Fill rate can be calculated on an ongoing basis but is more useful when calculated weekly, monthly, or annually.
If you’re familiar with what is pre-order, you know how useful this method is for maximizing fill rate. Pre-ordering is the process of offering your customers the opportunity to buy a product or service prior to its production. This increases fill rate because you know exactly how many products you need.
Fulfillment Rate Definition
Fulfillment rate is the number of orders marked as shipped over a given period, usually 90 calendar days. This number is separate from fill rate. Fill rate is the percentage of orders successfully picked and packed; fulfillment rate is the number of completed orders that have shipped.
Supplier Fill Rate
Supplier fill rate is the number of suppliers that have delivered orders on time as a percentage of total warehouse orders. This type of fill rate is similar to vendor fill rate.
Inventory Fill Rate
Inventory fill rate is the amount of inventory being used for customer orders as a percentage of total inventory. Fill rate and inventory fill rate are complementary.
Fill rate shows you the percentage of orders that can be fulfilled based on your existing inventory. If your inventory fill rate is unexpectedly low, this is often the cause of a low fill rate. On the other hand, if your inventory fill rate is too high, you may be stocking more than you need and wasting money.
Fill Rate Formula and Fill Rate Calculation
Using the fill rate formula is easy. First, take the number of orders completely fulfilled and divide it by the total number of orders received. Second, multiply that number by 100. The resulting number is your fill rate percentage.
Here is the formula written out:
Fill rate = (Fulfilled orders / Total orders) x 100
Download our free fill rate spreadsheet template to make your calculations even easier.
Improvement Rate Formula
Improvement rate is a formula that shows the percentage of increase from one number to another. An improvement rate formula can demonstrate how much a business or operational need is improving month over month. It may be used to measure inventory tracking, packing and shipping accuracy, kitting efficiency, or any other eCommerce operation.
It’s simple to calculate improvement rate. First, subtract the first month’s number from the second month’s number. Second, take that number and divide it by the first month’s number. Third, take that number and multiply it by 100. That will give you your improvement rate percentage.
Here is the improvement rate formula:
Improvement rate percentage = (Second month’s total - first month’s total) / first month’s total x 100
Filled to The Brim
Once you know how to calculate fill rate, you can take steps to improve it. Fill rate is simply one of many factors that play into effective warehouse organization.
By using proven principles for your warehouse management process flow, you can decrease your dead stock and achieve faster order processing. As you fulfill orders faster, your fill rate will go up. This leads to greater profits, especially if you know how to determine wholesale vs. retail price.
This gives you more time for B2B marketing and improving your brand presence on the eCommerce marketplace or online marketplace of your choice. Combined with excellent customer service, a high fill rate integrally contributes to eCommerce business success.
Frequently Asked Questions About Fill Rate
Now that you’ve learned the basics about fill rate, you’re probably wondering how to get better at it. Check out the questions and our answers below for more:
What is a good fill rate percentage?
A good fill rate percentage is as close to 100% as possible. This means you’re able to fulfill every order you receive without a stockout or backordering. Achieving a 100% fill rate is close to impossible, because this means you’d have every requested product on hand at all times.
The average company’s fill rate is between 85-95%, which means some products may be out of stock, or there was more demand than anticipated. Striving for a 97-99% fill rate should be among the goals of any warehousing team.
What is the difference between service level and fill rate?
Service level is the percentage of your product replenishment cycle that fulfills ongoing customer demand; fill rate is the percentage of total orders you’re able to fulfill with your available inventory. In other words, service level defines how frequently you’re able to serve your customers, whereas fill rate defines how well you’re able to meet overall demand.
Can fill rate be more than 100?
Yes, a fill rate can be higher than 100%. Fill rate is the percentage of orders you’re able to fulfill at any time, based on available inventory.
Your fill rate may be greater than 100% if you replenish stock too frequently, or experience an unexpected decrease in demand. It’s important to adjust your reorder point to match demand as closely as possible, which keeps your inventory holding costs low.