Friday, April 19, 2013

Improving Fill Rate with Customer Service Level

We know fill rates and customer service level measures different things. The former measures how much of total orders is fulfilled, while the latter tells you how often, say out of 10 stock replenishments, there will be an out of stock situation for one stock cycle (90% service level). Though they are different, both measures are actually related.

To find the relationship, check if a fill rate is due to a particular order with many lines not filled? or an accumulation of one or two lines not filled over many orders? If it is the former, then we need a much higher service level, if it is a the latter, theyoshinoya 90% will help increase Line Fill rate accordingly.

This line fill rate will have a snow-ball effect to revenue fill rate, and on-time fill rates.

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