How good service level management builds customer trust
Sales are the number one priority for most retailers.
Delivering the right amount of product to the right place at the right time has always been important. In today’s market, there’s a heightened sense of awareness for meeting and exceeding service level targets. Sales are the number one priority for most retailers, and the only way to deliver is to have the inventory when and where consumers want it.
Understand your customer’s definition
When you’re discussing service level with your customers, you need to understand their definition – and there are only two numbers that you need to calculate service level:
- Cases delivered (on time, with correct paperwork and labelling, in spec to the right place)
- Cases ordered (on the retailer’s purchase order)
Remember to use their language. Start with this definition and the results. Explain the results relative to why the product was there or not. If there are issues or reasons for differences, you can add that to the conversation.
For example: If your purchase order was for 520 cases, yet you had 500 cases that arrived 2 days late, don’t tell the retailer you have a service level of 98%. Report 92% and explain that when you add the 500 cases you were able to produce because your staff worked overtime to finish an order that came in late, it goes up to 98%.
Consider all parts together
Delivering great service levels requires you focus on several key factors in your business. If one doesn’t deliver, you might not fill your orders on time. Producing a food or beverage product can be complicated, and you must focus on all these parts of your business to be successful:
- Ingredients - confirm with your ingredient suppliers there is an ample supply. You might have to consider having more inventory in the short-term to meet demand changes.
- Equipment - ensure maintenance is up-to-date and consider extra inventory of parts that you might need for back up or repairs.
- Labour - this is one of the biggest challenges. Find the right solution for your needs and manage the costs as much as possible.
- Packaging - confirm with your packaging suppliers there is an ample supply. You might have to consider having more inventory in the short-term as demand fluctuates.
- Inputs - confirm with your input suppliers there is an ample supply. You might have to consider having more inventory in the short term to meet production targets.
- Logistics - this is the final step to get your product to market. Consider the reliability of your logistics partners and be proactive about confirmations and commitments to move product when it’s ready to go.
Communicate your service level to your customers. If you foresee a problem, be proactive and let them know in advance. They’re busy managing thousands of SKUs, so let them know how you’re doing. When you report an accurate service level, you’ll build trust with your customers, which is valuable in any business relationship.
Article by: Peter Chapman