SPPLAN – Service Parts Planning

Service Level in Planning

Service level is much discussed as an important way to plan. However, once you get past the general principle, operationalizing service level planning brings up the following topics that must be answered:

1. Where in the supply chain are service levels being set?
2. Should the service levels be set at the location?
3. Service levels for a product line (say iPods vs. MacBooks) or within product lines (20 GB vs. 40 GB Ipods). Thus is there is a “service matrix” that an organization implicitly or explicitly maintains?
4. Service levels can be set for particular customers and inventory can be planned as separate “pools.” How will this be managed?

The end result of this is there is no “one service level” and companies need to be able to change their service levels based upon item profitability, strategy, growth potential, competitive situation, etc.. The service levels are dynamic across geographic, product and time dimensions, and the technical service infrastructure needs to support this.

Technology Enablement

A planning system can allow you to operationalize these service planning objectives by bringing up its complex service planning functionality. However, the execution system needs to be synchronized to with the service planning system in terms of these different service level objectives.

Planning vs. Execution

One of the difficulties is managing or limiting the discussion of service level management between the planning engine and the execution system. A planning system attempts to set up the correct conditions to maintain a particular service level, however, it is the execution system that is responsible for meeting it, and or course which has great control over whether it is met. For instance, imagine that two customers have a service contract, one of them which is currently over its contractual service level, and the other which is under the level. When a demand comes in from both for the same part, an important question is who gets priority for that part. The execution systems would ideally have the ability to provide this to the customer which is under the agreed upon service level rather than the one which is over the agreed upon service level. However this assumes a number of things:

1. The company has very good metrics on the current service level provided to its service contract customers
2. Authority to issue to part to the correct customer is decentralized to the part manager.

More details to follow on how planning systems and execution systems can be configured to manage matricide service levels.

To find out more about service level planning see this post.

http://spplan.wordpress.com/2008/04/05/service-level-planning/