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Auto Dealership Inventory: What Is Order Cycle Time?

  Mike Bachara   |     Jul 14, 2022

June Blog Order Cycle TimeThere are many different ways for your dealership to deliver an excellent customer experience. In your parts department, your order management process can be improved by optimizing order fulfillment and accuracy.

One of the best ways to improve your order management process is by reducing your order cycle time. 

But what exactly is order cycle time? 

Order cycle time is used to measure the efficiency of your operations. It tells you the time it takes for your customers to receive a finished product after they place their order. 

If a customer comes to your parts counter to buy parts without service, order cycle time would be how long it takes for the customer to receive the part they’ve requested. If, however, the customer comes in for service, the order cycle time would be how long it takes for them to receive their repaired vehicle after they drop it off. In these situations, you don’t have full control over the order cycle time, since it will take the service department additional time to fix the car. However, being able to provide parts to your team quickly and accurately will help improve the order cycle time. 

The shorter your order cycle time, the better experience your customers will have and the more likely you are to see return visits, referrals and increased revenues. If your order cycle time is too long, it will reduce customer satisfaction, lead to more complaints, and have a negative impact on customer loyalty. 

Slow order cycle time can also be a key indicator of supply chain issues. 

If you have a slow order cycle time, you may need to review your supply chain process for inefficiencies. For example, maybe it is taking an unnecessarily long time for your parts team to receive and process parts requests. Or maybe the receiving process is overly complicated or often results in errors that take time to fix. 

It’s also possible that your inventory is overly disorganized, making it hard to find parts, or your inventory records are inaccurate or incomplete. 

How to calculate order cycle time

Order cycle time is calculated using the following equation: 

Order Cycle Time = (Delivery Date – Order Date)/Total Orders Shipped

Now keep in mind, if you have a lot of specialty orders for large projects that take more time to receive from your vendor, this will affect your average order cycle time. 

To help make your average order cycle times more helpful, organize your orders by types of jobs. For example, calculate your average order cycle times for specialty projects and then calculate it again for jobs that are deemed regular maintenance. 

If you're interested in optimizing your inventory management processes, contact Pro Count West today

Guide to Optimizing Inventory MGMT

By Mike Bachara

Mike Bachara | Owner of Pro Count West
Mike Bachara | President Pro Count West

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