JIAOTONG UNIVERSIT 96 Supply Chain Management Lecture 11 Optimal Level of Product Availability Instructor(s) Prof.Jianjun Gao Department of Automation School of Electronic Information and Electrical Engineering SEIEE AU406
Supply Chain Management Instructor(s) SEIEE AU406 + - Optimal Level of Product Availability Prof. Jianjun Gao Department of Automation School of Electronic Information and Electrical Engineering Lecture 11
Outline The importance of the level of product availability Factors affecting the optimal level of product availability Managerial levers to improve supply chain profitability Supply chain contracts and their impact on profitability Setting optimal levels of product availability in practice SEIEE AU406 12-2
+ - SEIEE AU406 12-2 Outline The importance of the level of product availability Factors affecting the optimal level of product availability Managerial levers to improve supply chain profitability Supply chain contracts and their impact on profitability Setting optimal levels of product availability in practice
The importance of the level of product availability The level of product availability is measured using the cycle service level or the fill rate The metrics for the amount of customer demand satisfied from available inventory The level of product availability=the customer service level>responsiveness of supply chain Need the balance between product availability and cost of inventory SEIEE AU406 12-3
+ - SEIEE AU406 The importance of the level of product availability The level of product availability is measured using the cycle service level or the fill rate The metrics for the amount of customer demand satisfied from available inventory The level of product availability=the customer service level responsiveness of supply chain Need the balance between product availability and cost of inventory 12-3
The importance of the level of product availability Nordstrom has focused on providing a high level of product availability and has used its reputation for responsiveness to become a successful department store chain. The prices at Nordstrom are higher than at a discount store,where the level of product availability is lower. Some power plants try to maintain several months of fuel supply to avoid any probability of running out. Most supermarkets carry only a few days'supply of product,and out-of-stock situations do occur with some frequency. SEIEE AU406 12-4
+ - SEIEE AU406 Nordstrom has focused on providing a high level of product availability and has used its reputation for responsiveness to become a successful department store chain. The prices at Nordstrom are higher than at a discount store, where the level of product availability is lower. Some power plants try to maintain several months of fuel supply to avoid any probability of running out. Most supermarkets carry only a few days’ supply of product, and out-of-stock situations do occur with some frequency. 12-4 The importance of the level of product availability
The importance of the level of product availability The Internet allows a customer to easily shop at an alternative store if the first choice is out of stock. This competitive environment puts pressure on online retailers to increase their level of availability. Different firms provide different levels of product availability. Every supply chain manager must use factors that influence the optimal level of product availability to target that optimal level and identify managerial levers that increase supply chain surplus SEIEE AU406 12-5
+ - SEIEE AU406 The Internet allows a customer to easily shop at an alternative store if the first choice is out of stock. This competitive environment puts pressure on online retailers to increase their level of availability. Different firms provide different levels of product availability. Every supply chain manager must use factors that influence the optimal level of product availability to target that optimal level and identify managerial levers that increase supply chain surplus 12-5 The importance of the level of product availability