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Delivery service level: definition & important aspects for buyers
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Delivery service level in a nutshell:
The delivery service level describes the percentage of deliveries completed on time and in full in relation to the total number of all deliveries. For Purchasing, this KPI is essential for evaluating supplier performance and ensuring a stable supply.
Example: An automotive supplier achieves a delivery service level of 98.5% by receiving a total of 985 deliveries on time and in full out of 1,000 deliveries in the first quarter of 2023, while 15 deliveries have deviations.
Contents
Introduction to purchasing controlling: delivery service level
What is the delivery service level?
The delivery service level is a key figure that indicates the extent to which a company can fulfill its customers' orders in full and on time. It measures the ability to deliver the desired quantity of a product to the right place at the right time. A high delivery service level is an indicator of efficient logistics and customer-oriented processes.
Core elements of the delivery service level
Significance for purchasing
In purchasing, the delivery service level is a key criterion when evaluating suppliers. A high delivery service level has a direct impact on end customer satisfaction and supply chain efficiency. By monitoring this key figure, buyers can identify potential bottlenecks at an early stage, optimize stock levels and strategically select suppliers.
Application of the delivery service level in practice
The delivery service level is determined by dividing the number of orders delivered on time and in full by the total number of customer orders. This key figure helps to evaluate the efficiency of the supply chain and identify areas for improvement.
Calculation example
Example: A company received a total of 500 customer orders in the month of April.
- Number of orders delivered in full and on time: 450
- Total number of orders: 500
Calculation of the delivery service level:
Delivery service level = (450 / 500) × 100% = 90%
A delivery service level of 90% shows that the company has delivered 90% of customer orders on time and in full. To improve this, the purchasing department can analyse the causes of the 10% of unfulfilled orders and initiate measures such as supplier development or process optimization.
Evaluation and strategic findings on the delivery service level
✓ Critical success factors
→ Precise monitoring: implementation of a robust system for real-time monitoring of delivery dates and quantities
→ Supplier management: close cooperation with key suppliers through regular performance reviews and development programs
→ Process integration: dovetailing of ordering processes, warehousing and transport logistics for optimum delivery performance
⚠ Challenges and limitations
→ Data complexity: Difficulty in collecting and harmonizing delivery data from different sources
→ External factors: Limited control over unforeseeable events such as natural disasters or global crises
→ Conflicting objectives: balance between a high level of delivery service and optimal warehousing
Future prospects and trends:
"Digital transformation enables a new dimension of supply chain optimization."
→ Predictive analytics for preventive supplier management
→ Blockchain-based transparency in the supply chain
→ AI-supported optimization of order quantities and times
→ Integration of IoT sensors for real-time tracking
◆ Strategic implications
→ Investments in digital tools for automated supplier assessment
→ Establishment of proactive risk management for critical suppliers
→ Development of dual-sourcing strategies for supply-critical materials
Conclusion on supplier evaluation
The delivery service level is an essential key performance indicator for evaluating logistics efficiency and customer satisfaction. Its systematic recording and optimization enables companies to improve their supply chains, reduce costs and achieve competitive advantages. By using modern technologies and strategic supplier management, companies can achieve a high delivery service level and secure it in the long term.
