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| Supply Chain Design >
Stock Service Targeting |
| | Sequoia can compute precisely what service levels will maximise your profits. We have done this for all products, with companies up and down the FMCG supply chain.
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| The only way to know you have your stock levels right.
In the optimization process, every element impacting the safety stock holding is taken into account by converting it to a cost.
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| | Using the statistical relationship between stock and service we can compute the cost of stock to provide a given service level.
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| | This is only half of the trade-off. We also need to take into account the cost of a lost sale when we do not achieve 100% service. This should be a function of the margin you lose when you lose the sale, factored by the customer’s attitude to your stock-out.
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| | This creates a trade-off which enables us to find the optimum (least cost) service point, and consequent safety stock holding.
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In our experience the optimum customer service level is rarely below 99% for high volume items in FMCG companies.
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