Definitions – Priority target measures
The target measures are based on three important dimensions in the term «service level»:
- Quantity – availability
- Time – reliability
- Administration – security
The priority targets measures should be followed and evaluated continuously with focus on level, trends and development.
Target measures Correct quantity – availability
The target measure “Correct quantity” measures availability as precision in quantity delivered.
Definition:
| Number of delivered sales Units | = Availability |
| Quantity of ordered sales Units |
The quantity ordered is the amount that the customer initially ordered.
Not delivered quantity represents deviations in delivery.
Target measure At the right time – reliability
The target measure “At the right time” measure reliability as precision in delivery time.
The target measure is used to measure compliance with time limits defined in the agreement between the parties.
The target measure can be used along several dimensions in the value chain.
Examples may be if orders are sent at the right time, if order confirmations are sent at the right time, if delivery is picked up at the right time, if Despatch Advice is sent at the right time, etc.
Definition (with example order):
| Number of late or early delivery orders | = Reliability |
| Total quantity of orders |
Delayed or premature is determined by whether exchange / delivery is within the agreed time frame.
At Incoterms Ex Works delivery terms, the assessment of the supplier’s reliability is on the supplier’s ramp.
The delivery is received when the order / delivery etc., is acknowledged for.
Target measures Correct Administration – Security
The target measure “Proper Administration” measures security as compliance between what is ordered in the order and what has been delivered and has been invoiced, that is, the correct product without errors and with the correct documentation.
Definition:
| Quantity of orders without credit / debit notes | = SAFETY |
| Total quantity of orders |
Correct administration means that Despatch Advice, shipping notes, invoices etc. are complete and error-free in relation to the delivery.
Only credit and debit notes affecting physical delivery are included in the measurement.
The target measure can also be used to measure the quality of orders from the customer.
Examples of calculation of service level for priority target measures can be found in the document
Examples of priority target measures
