Supply improved service levels

Christopher M. 2000. Logistics and Supply Chain Management. Strategies for reducing costs and improving service levels. II edition, Warsaw, PCDL. 

When we switched to our new demand management solution, we saw our forecast accuracy improve immediately. We also saw service levels take off in a positive way and our inventories decreased. We exceeded our original projections the accuracy is driven by a change from a 50,000-foot view of forecasts to a more detailed look. Now we can talk about a particular deal with a retailer and know what kind of lift is generated and then that drives the supply chain. There is no second-guessing, said a demand planner at a food and beverage company. 

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. 

End-to-end communication among trading partners minimizes the bullwhip effect, which results in decreases in inventory at all levels in the supply chain. VICS conducted a survey of retail companies using CPFR pilot programs in 1998-1999. They reported that due to CPFR there was an 80% increase in sales with the CPFR partners, 10% reduction in inventory, improved fill rates, and near 100% service levels. One of the large and best practices of CPFR implementations has been between P G and Wal-Mart. Several CPFR implementations between other companies are presented as case studies in the VICS website. 

Express service providers have faced the main problem that is time management besides the cost issues. Time management is not only trouble in express transportation, but it occurs to many businesses also. Time is extremely important factor of logistics and supply chain especially in express transportation. The big four express companies can manage limited time and improve their service level more and more. Meanwhile, the local service provides cannot manage time to deliver shipments to destinations as the big four do. They are able to wait the shipments full-truck-load only. Another big competitor can pick up shipments and deliver to end-customers within next day service. 

Since September 1998, the company has improved and sustained a customer service level at 97 per cent and inventory turnover of around 5.0. The sales turnover in 1998 has increased by 20 per cent in real terms in spite of some supply shortfall from the corporate network in the first half and the adverse economic and political conditions of Turkey. GSK Turkey has been recognized as a major business in the pharmaceutical giant GSK Group and the business plan for 1999 was aiming at a turnover of US 110 million. 

The publication of this series of books will supply reliable reference information to a wide circle of engineers and scientists and will serve as a basis for the development and practical utilization of pertinent official tables of standard reference data. The use of such data, obtained on the basis of the most up-to-date and accurate methods of study, is one of the conditions necessary for improving the level of scientific and developmental work. It ensures effective monitoring of industrial processes and quality of industrial output and promotes efficient utilization and accounting of the consumption of raw and finished materials, fuel, and energy. It is thus obvious that supplying reliable data on the properties of substances and materials is an important economic activity. The State Service of Standard Reference Data has been established primarily to supply this need. 

In a VMI system, the supplier monitors the inventory levels of the retailers, and determines when and how much to deliver to the retailers as well as when and how much to replenish its own inventory at the warehouses. It is known that by employing VMI, one can reduce the operating cost of the supply chain and maintain or improve the service levels desired by customers. 

Setting up a supplier association was viewed as the best way to address the needs and timescales for changing the supply chain. Suppliers could be involved simultaneously in reducing lead times from 2 weeks to 2 days (receipt of order from TELE to delivery at end user s site). This would be achieved through improved responsiveness, both inbound and outbound. Far Eastern competitors would be unable to match such service levels and total logistics costs. 

In this chapter, we explore the process of determining the optimal level of product availability to be offered to customers. The chapter examines factors that influence the optimal cycle service level. We discuss and demonstrate how different managerial levers can be used to improve supply chain profitability by increasing the level of product availability while reducing inventories. 

The level of product availability is measured using the cycle service level or the fill rate, which are metrics for the amount of customer demand satisfied from available inventory. The level of product availability, also referred to as the customer service level, is one of the primary measures of a supply chain s responsiveness. A supply chain can use a high level of product availability to improve its responsiveness and attract customers, thus increasing revenue for the supply chain. However, a high level of product availability requires large inventories, which raise supply chain costs. Therefore, a supply chain mnst achieve a balance between the level of availability and the cost of inventory. The optimal level of prodnct availability is one that maximizes supply chain profits. 

At the system level, requirements are for a reliable, cost-effective and attractive solution to energy supply needs.. This means pursuing solutions that can reduce costs at the component and/or system level, increase the overall performance of the system and improve the functionality of and the services provided by the system. 

As mentioned above, one other big lever is to optimize product and information flows, taking a cross-functional view of the entire supply chain from the original supplier to the end customer. This can reduce inventory levels substantially, as well as smoothing out production instability and its associated costs. It also often helps to improve levels of customer service, such as on-time delivery, and capacity utilization. 

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