Customer service level

Most of the authors except Chopra/Meindl share the objective to minimize costs in the inter-company supply chain between companies with given demand and customer service level. Chopra/Meindl support the objective of value maximization, where it is later proposed to distinguish this objective with the term value chain management... 

Supply chain networks Simultaneous maximization of (1) participants expected profits, (2) average safe inventory level (for plants, distribution centers and retailers), (3) average customer service levels (for retailers), (4) robustness of selected objectives to demand uncertainties and fair profit distribution. A two-phase fuzzy decisionmaking method Chen and Lee (2004) extended the smdy of Chen et al. (2003) by including uncertainty in product demands and prices. Cheu et al. (2003b) Cheu and Lee (2004)... 

Do you differentiate customer service levels by customer type ... 

Another issue that needs to be established when working with a DSS is the measures by which the various solutions will be evaluated. Reducing toted cost may be a goal, but in some cases improving customer service level may be more pertinent. DSS interfaces usually allow setting these parameters and indicating the balance required by the user. 

Even the manufacturer of a full line of products who has geographically concentrated customers may find direct channels less profitable than indirect channels for some of the products and customers. For example, many pharmaceutical companies have increased their use of wholesalers, even in concentrated market areas, because of the high customer service levels required. 

Customer service is a complex subject. However, it is usually measured in terms of the level of product availability, speed and consistency of the customer s order cycle, and communication that takes place between seller and customer. Management should establish customer service levels only after carefully studying customer needs. 

In addition, the extra planning time that results due to increased communication speed will allow freight consolidations, warehousing cost savings, and lower lot quantity costs. Customer service levels can be improved and total operating costs reduced—truly a unique opportunity. 

Customer service What is the probability that this relationship will substantially improve the customer service level as measured by the customer, for example, improved on-time delivery, better taking of movement, paperless order processing, accurate order deliveries, improved cycle times, improved fill rates, customer survey results, and process improvements ... 

What is the trade-off between the number of facilities and customer service level What is the cost of improving service level ... 

Consider the in-stock availability offered to the customer (with a nearly zero lead time) by the retailer if the retailer and manufacturer were to carry inventory. It is clear that the retailer s choice of inventory would reflect retailer margins and costs associated with excess inventory. Such a choice of customer service level may not reflect what is best for the overall supply chain, something that is discussed in the chapter on coordination. Thus, a focus on availability will encourage the manufacturer and retailer to establish coordination agreements that can increase the delivered service level to the customer. 

An alternate approach to increase customer service level is to decrease manufacturer and retailer lead times by adjusting choice of the warehouse location such that the retailer can pick up product during backhaul trips. Such an adjustment of location may represent an optimal approach to improve overall performance. 

Thus QR allows the customer service level to be increased without decieasii retailer profits. 

Companies in today s marketplace face an ever increasing requirement to improve customer service level, usually measured as order or case fill rate, to reduce product Out-of-Stock (OOS) on the shelf, at the same time reduce supply chain costs, defined as the sum of manufacturing, transportation, inventory, and distribution costs, to remain competitive in the marketplace. 

To cope with this scenario, many companies are trying to move from a pure Push strategy, produce and distribute based only on forecast, to a Pull system, operate based on actual customer demand, in order to better balance supply availability with customer demand, delivering the expected customer service level while, at the same time, achieving the required supply chain efficiency. 

Oshawa Foods, a 6 billion Canadian food distributor and retailer, had tremendous success with Pillsbury, Quaker and H.J. Heinz with inventory turns improving from 3 to 9 times, while achieving customer service levels of 99%. 

The author had also implemented a VMI project in the beverage industry with one key customer from the airline industry to increase customer service level (fill rate) at the same time that optimizes the inventory levels. Figure 4.17 illustrates the relationship between the two companies ... 

A well run distribution operation is one operation that maximizes delivery asset (e.g., trucks) utilization at the same time that minimizes labor (e.g., drivers and delivery helpers) and delivers the expected customer service level (e.g., order or case fill rate). 

Segmentation is one of the key strategies to deliver a high customer service level, cost effectively, and can be defined as the process of splitting customers or potential customers within a market into different groups, or segments, within which customers share a similar level of interest in the same, or comparable, set of needs satisfied by a distinct marketing proposition. 

Organizational structure aims to synchronize all internal functional areas to become integrated and agUe, providing a high customer service level (perfect order greater than 95%) on a monthly basis. 

Same as in level 4, but in addition warehouse performance metrics are included in the customer service level agreement (SLA) signed with customers. 

The operation shows inventory level unbalance, low customer service level and over refiance on price promotions to meet monthly sales targets. 

Channel and customer service are also a key input to develop SC strategic plan, as they will define how the company will serve the market and what service packages will be offered to customers to differentiate the company in the marketplace. Supply chain should be a key enabler to deliver the expected customer service level. Examples of inputs ... 

Become a demand driven supply chain to eliminate inventory at the same time that delivers expected customer service level. 

Keep high quality product rating to differentiate our products in the market. Improve routing capability and control delivery execution to reduce miles traveled and ensure customer service level. 

A more recent variant of the value chain is the services value chain. Definitions vary, but in general they refer to optimizing after-sales service situations—right across the service supply chain. The service supply chain was seen as one that, over time, delivered the fully collaborative state of low inventories, efficient planning, and high customer service levels. This may have included all planning, movement, and repair of materials activities to enable after-sales support of products (de Waart Kemper, 2004 de Waart, 2003 Poole, 2003). 

Customer service ratio In a make-to-stock company, the percentage of items or dollars shipped on schedule. In a make-to-order company, the percentage of items or dollars shipped on time. Synonymous terms include Jill rate and customer service level. 

Service failures — Another critical operational key factor you may want to discuss is your weekly customer service levels. Let s face it, if your organization is like most motor carriers, you are not in the transportation business you re in the customer service business. 

Push-based ATP models must take into account very specific customer-related constraints such as customer priorities, sales channel characteristics, variations in customer service levels and so on. Inventory control and planning models usually operate at a more aggregate level. 

---