Practice Summary: Intel Calculates the Right Service Level for Its Products

All too often, companies do not rigorously calculate service levels. Instead, they arbitrarily set service levels by employing a top-down mandate. They employ this arbitrary approach because they have difficulty in quantifying the economics of a specific service level; the primary difficulty these companies encounter is quantifying the cost of not satisfying demand. Intel’s Customer Fulfillment and Logistics Group has developed a data-driven approach to calculate customer service levels. The major breakthrough in this work is a simple three-step process that diverse functions across the supply chain can employ to agree on the costs associated with a given service level.