Frequently Asked Questions
What is the optimal fill rate?
Simply put, higher fill rates are better. While the ideal fill rate can hinge on the type of SKUs or the number of products you sell, a good fill rate typically rests between 85 and 95% (with the best performing retailers reaching up to 99%). A low fill rate can be improved through accurate demand forecasting, safety stock parameters, and alternatives for out of stock inventory items.
Why is fill rate important?
When you stockout or backorder products, it can negatively affect the customer experience, and in turn, result in lost sales. Fortunately, by using fill rate percentage, you’ll have a better understanding of how to secure customer satisfaction, as well as how to refine your inventory management and supply chain processes. For instance, if your order fill rate is consistently low, you have an opportunity to look into other suppliers or revisit your reorder point to ensure you’re maintaining appropriate stock levels.
What’s the difference between fill rate and service level?
Service level involves calculating the percentage of the replenishment cycle that ends with all customer demand met. In essence, service level is the probability of not having a stockout in a given sales cycle. Fill rate, by contrast, calculates the percentage of demand that’s satisfied from available inventory, or, the probability that product demand is supplied from available inventory. A popular way to differentiate the two is that service level measures fulfillment from a customer angle, while fill rate measures things from an inventory performance angle.