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Sam Phipps
Supply chain consultant
In the building trade, customers can not afford to put their project on hold because the tools, materials or components they need are out of stock. However, with spiralling ranges consisting of thousands upon thousands of products, maintaining 100% availability across the entire assortment would render most building suppliers totally bankrupt. But what can supply chain teams do to improve stock availability without exploding supply chain costs?
Ultimately, service levels are a direct translation of a business’ corporate strategy to the inventory strategy. As such, this is how businesses determine to what extent they can satisfy your customer’s needs based on the stock capacity.
For many organisations, this about finding the balance between the strategic desire to improve stock availability and the need to satisfy the financial constraints in place!
For many businesses in the building industry, the criteria for setting these service levels is unclear. As a consequence, many organisations rely on inappropriate service levels which, at best, are set on the basis of only a quick and vague analysis. It is only when the service level has a negative impact on safety stock or out of stocks for example, that the service levels are reviewed and quickly adjusted (again, without any real analysis).
Finding an optimal service level allows businesses to focus their investment and efforts which in turn helps boost availability on the items where it is required most. However, for a service level strategy to be truly effective, it must take into account a broad number of components including turnover, capacity, customer demand and cost.
Discover how you can offer your customers a more reliable service with our 5-step-guide. Through following these steps, you can increase availability levels and boost customer satisfaction whilst demolishing supply chain costs!