Cost Per Order
Cost ManagementCost per order is a metric that totals all expenses associated with fulfilling a single customer order, including labor, materials, shipping, and overhead allocation. This metric is crucial for understanding profitability and pricing strategy. Components include picking labor, packing materials, shipping costs, and a share of warehouse operating costs. Reducing cost per order is a primary goal for fulfillment operations, achieved through efficiency improvements, automation, process optimization, and better inventory management.
Related Terms
Order Fulfillment
Order fulfillment is the complete process of receiving, processing, picking, packing, and shipping customer orders.
Pick and Pack
Pick and pack is a fulfillment process where warehouse workers pick items from shelves based on an order list, then pack them into a shipping box.
3PL (Third-Party Logistics)
A third-party logistics provider (3PL) is an external company that specializes in warehousing, fulfillment, and distribution services.