During the recent webinar, Inventory Fitness – Governance, Targets, and Segmentation, we took audience questions and answered them.
Here are some issues that people in industry face and are interested in finding a solution to!
Question 7 of 14
Question:
How do you recommend measuring inventory availability?
Answer:
So, the first thing is that we don’t believe that metrics should be fair. We believe that they should drive action. And so, one of the key things is deciding what’s okay. So as an example, you could say, if the quantity shipped does not equal the quantity ordered – fail.
If the date that you were supposed to ship it, you did not ship it – fail.
In any case, you decide all of the things that are impacting your customers and that are going to make them unhappy.
Any order that meets one of those criteria is an “F,” and then you divide it by the number of orders that you shipped, and that’s your customer service level.
Yep. Finite parameters are key. In this case, having a tolerance, you can, but everybody’s going to push to the end of the tolerance anyway. So, at some point, you failed.
Another critical component. So, Kai, yes to all of that. The critical component here is to have balanced metrics as well. So, while they may not be fair, they must be balanced. So how much inventory you have, how you did on your order performance, but also expedites.
How did you get to the service level you had? So, what hoops did you jump through to maintain service level? At a certain level of expedite – fail. And the customer-facing service level itself, did the order arrive at the customer when we said it would? So, if it did in the correct quantity, then that’s a pass. But if you jump through all kinds of hoops, you’ve gotta be able to measure that as well. Otherwise, it’s a fail, and you’ve resigned yourself to jumping through hoops for the rest of your life.
Remember, we’d be happy to chat with you about any of this in more detail.
And if you’re interested, check out our schedule for upcoming business process improvement courses that we offer throughout the year to help you achieve business excellence.