What Is Fill Rate?

Managing an ecommerce business supply chain is a tricky process. Low stock levels lead to stockouts, back orders, frustrated customers, and lost business; too much inventory causes warehouses and fulfillment centers to overflow with unsold goods. To satisfy customer demand with a steady supply of available inventory, your business must manage inventory levels to avoid this double-edged sword. 

To steer clear of these risks and meet customer expectations, you can use a simple calculation tool called fill rate. 

Learn what fill rate means, how to calculate it, and how it can impact your business’s reputation.

What is fill rate?

Fill rate is the percentage of orders that you fill on time. This rate measures how successfully your business can fulfill orders from available stock without customers facing back orders or stockouts.

Fill rate correlates with the efficiency of your company’s order fulfillment process and its capacity to meet customer demand. If the fill rate percentage is high (close to 100%), that’s a good sign your inventory management operation is in good shape. When the fill rate dips, that’s a red flag. If too many products are out of stock or back-ordered, customers will likely grow impatient and take their business elsewhere. 

Several factors can influence your fill rate, including technical errors, inaccurate inventory data, order processing errors, and a sudden surge in new customers. Any or all of these can derail the fulfillment process, leading to stockouts or back orders, which lower your fill rate. 

By keeping tabs on this key efficiency metric over weeks and months, you can gauge how well your business is meeting customer expectations and plan your inventory accordingly. 

Benefits of a high fill rate

• Satisfied customers
• High revenue potential
• Streamlined supplier performance
• Efficient inventory management

Maintaining a good fill rate has several benefits: 

Satisfied customers

A higher fill rate tells you that your business is serving customers efficiently. The employees or suppliers are filling orders from available inventory right away—no delays, back orders, or stockouts. Getting orders on time makes customers feel great about your business’s capacity to deliver orders reliably, which has a lasting, positive impact on brand loyalty.

High revenue potential

When your fill rate is consistently high, you can expect fewer lost sales. This can, in turn, result in more repeat purchases, because customers have high confidence you’ll fulfill their orders promptly with each purchase. 

Streamlined supplier performance

When your fill rate is high, it means your fulfillment process has very few (if any) failure points, and your supply chain is running smoothly. If your fill rate suddenly dips, it can sound the alarm to collaborate with your suppliers to streamline deliveries and improve product availability.

Efficient inventory management

By keeping track of your fill rate over time, you will be in a better position to forecast demand and improve procurement planning. You’ll know what the optimal inventory levels should be, avoiding costly overstocks (too much inventory) or stockouts (too little inventory).

5 types of fill rates

• Order fill rate
• Warehouse fill rate
• Line fill rate
• Vendor fill rate
• Case fill rate

Fill rate usually refers to order fulfillment, but there are other types of fill rate metrics for different purposes. Here’s what they are and how to calculate them:

1. Order fill rate

The most common type, order fill rate is the percentage of customer orders a business fulfills without stockouts or back orders. For example, let’s say your store receives 1,000 orders for the week and fulfills 900 of them completely and on time. The fill rate is 90%. 

Order fill rate tends to correlate with customer service level (which can range from unsatisfactory to excellent). When customers receive the timely delivery of their orders in full, it is safe to assume that they’ll be satisfied. But a low fill rate—marked by back orders and delays—puts a dent in customer satisfaction rates.

2. Warehouse fill rate

Warehouse fill rate is a different way of thinking about order fill rate. It specifically examines warehouse performance and fulfilling all orders from stock.

A key factor influencing warehouse fill rate is order volume. As order volume increases, it puts more strain on inventory levels, and the risk of stockouts, which hamper the ability to deliver orders, is higher. This translates to a lower warehouse fill rate.

The only difference between order fill rate and warehouse fill rate is the viewpoint. Order fill rate takes the customer’s point of view, whereas warehouse fill rate comes from a warehouse operations perspective. A higher warehouse fill rate indicates faster delivery speeds, because products are readily available to ship.

3. Line fill rate

A customer order can often consist of many order lines, each representing a product and quantity. The line fill rate is the percentage of line items a business fulfilled out of the total number of line items on the order. You can use line fill rate to measure the efficiency of order fulfillment and identify high-demand products in short supply.

4. Vendor fill rate

You can use vendor fill rate to assess the performance of suppliers, distributors, and wholesalers. It measures the percentage of vendors who successfully completed order shipments on time. Let’s say you have 15 vendors and 10 of them delivered products on time; this means your vendor fill rate is 66%. Tracking low vendor fill rates is an indication you need to compensate for low availability by stocking up on inventory from other suppliers.

5. Case fill rate

Case fill rate measures the percentage of product case orders shipped without issues. Organizations use it to understand order fulfillment at the level of cases, not individual products. Wholesalers and distributors often use case fill rate to minimize shipping costs.

How to calculate fill rate

Fill rate math is simple, which you can calculate based on two numbers: the total customer orders in a given time (daily, weekly, monthly) and the actual number of orders fulfilled with zero problems.

The rate formula works like this: Divide the number of times orders were fulfilled by the total orders, and then multiply the result by 100 to express the fill rate percentage.

For example, say your business receives 200 orders in a given day and you fulfilled 190 of those orders without problems. The formula works like this:

190 fulfilled orders / 200 total orders = 0.95

Now, multiply the result by 100:

0.95 x 100 = 95%

The fill rate is 95%.

What does a good fill rate look like? 

Ideally, your fill rate should be as close to 100% as possible. In the real world, fill rates tend to range from 85% to 95% or higher. An average fill rate of 90% is a possible goal.

Keep in mind that sometimes a 100% order fill rate isn’t as ideal as it might seem. When businesses consistently fulfill orders at a perfect rate, this means there’s always available inventory. This sounds great, but it means there’s perhaps too much available stock in the warehouse, increasing overhead costs for warehouse storage. If that’s an issue, a slightly lower fill rate might be more cost-effective.

If you go too low, however, customer satisfaction will suffer. Through trial and error, you can find a balance that works best for your business.