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SERVICE AND differentiation policies

Service and differentiation policies

Service and differentiation policies

Service and differentiation policies are vital sub areas in the supply chain toolbox. Service is a kind of investment e.g. free capacity, stock availability, express transports, to strengthen market competitiveness. The “big question” is how much service is worth in terms of revenue growth and margins? To take the right decision regarding service policy a baseline of historical demand and service is needed as a reference. This is often done in a periodic management workshop forum where volume development, assortment mix, demand and service measurements are reviewed.

Assortment classification is a way of simplifying the decision process by enabling visualization of the complete assortment into different classes and understand the essence without looking into every detail. To make the right classification is not a technique but an art which have been in MYSIGMA´s toolbox for decades. Correct classification enables service policy differentiation, see illustration where price- and frequency classes are used as base for inventory strategy differentiation. Which classes to use is decided based on business criteria and could also include margin, supply risk, lead time etc.

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