Supply service level management

Service level management has to ensure that customer requirements are understood and fulfilled, if necessary, through differentiated supply chain models and service level propositions (see also Chapter 21). 

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. 

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 management has to ensure a smooth and uninterrupted supply of raw materials by defining dear service level agreements with suppliers, planning raw materials, issuing procurement orders, and tracking and managing supplier performance. 

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... 

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. 

In summary, supply chain management is a set of approaches to effectively integrate suppliers, manufacturers, warehouses and retailers, so that the produced merchandise can be distributed at the right amount and at the right time to the right place, satisfying the requirement of service level as well as minimizing the cost of the system. 

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. 

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. 

Those charged with the responsibility for supply-demand management become responsible for developing the forecasts and loading the plant in line with demand, capacity, inventory policies, and service level requirements. 

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

---