The Lemonade Stand Guide to Service Level
How I Explained Service Level to My 10-Year-Old
Imagine you’re running a lemonade stand. “Service level” is all about how good you are at giving customers what they want, when they want it. It’s like a scorecard for your lemonade business!
Let’s break it down:
- Cycle Service Level (CSL): This is about having enough lemons. If you have a 90% CSL, it means you’re pretty sure (9 out of 10 times) you won’t run out of lemons before your mom goes to the store for more. You’ll have enough lemons to make all the lemonade people want until then.
- Fill Rate (FR): This is about having everything a customer wants right now. If someone wants a lemonade with extra ice and you have it all ready, that’s a “fill.” If you’re out of ice, you can’t “fill” their order completely. An 80% fill rate means 8 out of 10 customers get exactly what they want right away.
- On Time In Full (OTIF): This means getting the lemonade to the customer on time and with everything they ordered. If you promise a lemonade by 3 pm with a cookie, and you deliver it at 2:55 pm with the cookie, you’re doing great! That’s OTIF.
- On Time Delivery (OTD): This just means getting the lemonade there by the time you promised, even if you forgot the cookie. If you promise it by 3 pm and it arrives at 2:55 pm, it’s OTD, even if you have to run back for the cookie.
So, service level is all about keeping your customers happy by having the right stuff, at the right time, and giving them exactly what they ordered! The higher your service level, the happier your customers (and the more money you make!).
Balancing supply and demand isn’t just for lemonade stands—let’s optimize your inventory together!
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