Product service levels, managing

Perhaps the best way to manage product service levels is to take into account both the protit contribution and the individual product demand. 

This article gives a short introduction to methods and tools based upon stochastic models that are applicable in supply chain management in order to give the reader a flavor of the potential of such methods. Typical terms we will deal with are service level, lot size, and production capacity. 

Several models, tools, and techniques are available for improving the quality of products and services and managing the total quality leadership process. Greene (1993) reviewed quality practices in lapan and the United States and claims to have identified about 24 dimensions of total quahty management (TQM). Edosomwan (1998a) identified several TQL tools summarized in Table 3 for improving quality and performance at the individual, work-unit, and organizational levels. 

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. 

Schneider, H., Rinks, D. B., and Kelle, P. Power approximations for a two-echelon invetory system using service levels. Production and Operations Management, 4(4) 381-400, 1995. 

Competitiveness is the fourth C in our list of concepts. Managing the competitiveness of a supply chain requires two sets of choices—the choice of the metrics of competition as well as responses to competitors choices. Typical metrics used include lead time, cost, profit, product variety, consistency, service level, fill rate, and others. For a monopolist, it is important to identify appropriate metrics to coordinate optimal choices across the supply chain. However, competition has an impact on the feasible... 

In this study, an industrial RFID application for effective management of TTSC at three levels of deployment, as shown in Fig. 33.3, is presented as a case study. The problem was initiated at the manufacturing facility level. The major concern was to ensure that the required TTSC are available at all times to the operators to maximize the service level. First, the lack of TTSC results in loss of production and, in turn, loss of profits. Second, the chemicals that are not used in production within their lives expire and become another cost factor. Third, disposal of time-sensitive materials, once they reach their shelf life, to prevent their usage on a product is also major concern. In order to ensure the first objective (i.e., maximize service level), the manufacturer prefers to order higher quantities of variety of chemicals. 

Only with up-to-date information, and with the continuous review and management of information, can an organization hope to achieve a balance of resources and stocks of inventory to meet planned service levels. The master planning and production scheduling process therefore has to be continuously monitored and updated to ensure that this occurs. 

In SCOR model application, this level is intended to define process types and priorities for improvement. At Wireless Services, it focused on the "value proposition" the company was promoting. The philosophy employed by SCOR uses competitive comparisons to establish what is considered the "basis for competition" or BOC. At Wireless Services, senior management examined each product line against supply chain performance attributes and decided on objectives for performance related to competition. Figure 23.2 shows the format of the product line BOC structure. 

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