Manufacturers and logistics professionals live and breathe by their fulfillment rate. A key indicator of performance, the fulfillment rate measures the percentage of customer orders that are successfully processed and delivered within the promised timeframe. A good fill rate signals strong inventory management, efficient logistics, and reliable supply chain operations, while a low fulfillment rate can open the door to declining profitability and market share.
Although fulfillment rate standards can vary depending on the specific manufacturing sector, a commonly accepted benchmark is around 95% to 98%.
Potential Causes of Fulfillment Rate Decline
- Inventory Management Issues such as overstocking or shortages
- Order Processing Delays due to outdated systems or data entry errors
- Supply Chain Disruptions such as supplier delays, bottlenecks and global trade issues
- Warehouse Inefficiencies including poor layout and/or outdated technology
- Demand Fluctuations due to sudden spikes in orders or seasonal variations
- Workforce Challenges such as difficulties attracting and retaining talent
Workforce Challenges
We’re zeroing in on this cause because it's often at the root of productivity losses. Here are some of the problems you might anticipate if you’re understaffed or your workforce is disengaged.
Picking Inaccuracy
The pick rate is the number of items a worker or machine can pick within a specified time frame. Pick rates can range between 50 to 150 picks per hour, depending on the specific warehouse operations. A higher pick rate translates to faster order fulfillment, enabling expedited deliveries and boosting customer satisfaction.
While the pick rate is a measure of speed, the picking error rate is a reflection of accuracy. Usually hovering between 1% and 2%, this seemingly small percentage can significantly impact a warehouse’s bottom line. It can lead to increased costs due to returns and rework, lost sales due to incorrect or incomplete orders, and decreased customer satisfaction.
If you experience difficulty keeping skilled workers, this can easily affect both the pick rate and picking error rates.
Increased Training Costs and Time
Constant onboarding diverts resources from fulfillment tasks. The average time requirement for paperwork related to onboarding a new hire is up to 10 hours, with an average onboarding cost estimated at $1252 per employee.
In addition, the new hire won’t reach full efficiency and accuracy for several weeks (or more).
Declining Morale
When employees are pressured to compensate for staffing shortages, they can become overwhelmed, leading to burnout. Rather than speeding up, they may slow down—especially if they feel undervalued. Burnout contributes to more mistakes, absenteeism, and turnover.
Even when staffing levels are sufficient, inadequate training, poor management, or lack of recognition can cause similar issues, affecting productivity and morale.
Workforce Optimization
Here are some steps you can take to improve employee engagement and retention.
Start Off Right
With ongoing talent shortages across all industries, it may be time to rethink the way you hire. Consider what a prospective worker wants from a job and do your best to supply it. Create an Employer Value Proposition to communicate the benefits and values that you have to offer prospective employees.
Keep on Training
Invest in additional training—especially if picking speed and accuracy is low. Upskilling is consistently shown to have a positive impact on employee engagement and retention. Consider revamping your onboarding process as well. One study found that a new hire with a positive onboarding experience is 18X more likely to feel committed to the organization.
Show You Care
Workers are more engaged with organizations that offer good benefits, demonstrated career paths, and recognition for their efforts. According to research, organizations with effective recognition programs have 31% lower turnover rates than those without recognition programs. Manpower has a comprehensive program of assessments, coaching and online courses in a wide variety of topics, as well as the opportunity to enroll in GED or college-level classes. This, combined with a robust employee recognition program, has resulted in achieving turnover rates significantly below industry averages.
Pulling it All Together: Onsite Management
Outsourcing talent management can be a viable way to improve talent attraction and retention. Onsite managers can regularly assess and refine manufacturing processes, identify bottlenecks, and implement best practices to enhance productivity. This ongoing evaluation and optimization helps businesses stay ahead of industry trends and maintain a competitive advantage.
Here's a case in point:
Through the standardization of candidate assessments and associate development programs, the client hired and retained higher-quality associates and, in turn, successfully increased their picking accuracy from 99.6% to 99.85% percent within the first year and for four consecutive years. We assisted in meeting and exceeding all of the distribution center’s performance improvement goals.
For more on the benefits of Manpower Onsite, read Optimizing Costs With Onsite Management.
Putting a Plan Into Action
Onsite management enhances workforce efficiency, but optimizing inventory management and leveraging automation are equally essential. Minimizing errors, refining warehouse layouts, and strengthening supplier partnerships help reduce delays and improve reliability. By investing in technology, employee training, and strategic planning, your business can boost fulfillment rates, cut costs, and ensure customer satisfaction.