Delivering Customer value - Defining customer service objectives

4 important questions on Delivering Customer value - Defining customer service objectives

What is the whole purpose of supply chain management and logistics?

To provide customers with the level and quality of service that they require and to do so at less cost to the total supply chain.

What does OTIF mean and what is its extension?

On-time, in-full

Extension: on-time, in-full and error-free

Assume sales are normally distributed. Define the possible service levels.

0 standard deviations of demand = 50% service level
1 SD = 84%
2 SD = 98%
3 SD = 99.9%
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Explain the Pareto Law (the 80/20 rule)

80 per cent of the total revenue comes from 20 per cent of the customers. Furthermore, 80 per cent of the total cost to serve comes from 20 per cent of the customers (but probably not the same 20 per cent!)

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