📊 Understanding Service Levels: Target vs. Actual
The Service Level is a key performance indicator (KPI) that measures the delivery reliability of your products. In simple terms, it answers the question: "What percentage of the time can I deliver immediately from stock?"
In Optiply, it is important to distinguish between the Actual Service Level (what happened) and the Target Service Level (what you want to happen).
1. Actual Service Level (Performance Metric)
This metric tells you how well you have performed historically. It measures the availability of your products over the last month.
Service Level per Product
You can find the specific service level for any item on the Product Details page. Optiply calculates this based on stock availability over the last 30 days.
The Formula:
Product Service Level = Number of days in stock (past 30 days) ÷ 30
Example: If a product was in stock for 27 days and out of stock for 3 days:
27÷30 = 0.90 (90% Service Level)
Service Level by Category
The category score is not just a simple average; it is weighted by importance. The Service Level for a category (A, B, or C) is the average of all individual product service levels within that group, weighted by their expected demand.
Implication: A stockout on a high-demand product drops the category score significantly more than a stockout on a low-demand product.
2. Target Service Level (Purchasing Setting)
This is the goal you set for Optiply to achieve. You can set a desired Service Level for each product category (A, B, and C) in the General Settings under ABC classification.
How it works: This setting directly influences your Safety Stock.
Higher Target (e.g., 98% for Category A): Optiply will calculate a higher safety stock to ensure you rarely run out.
Lower Target (e.g., 90% for Category C): Optiply will lower the safety stock, accepting a higher risk of stockouts to save on inventory costs.
Summary: Input vs. Output
Type | Definition | Where to Find It |
Target Service Level | The Input. The reliability percentage you want to achieve. Determines how much stock you buy. | General Settings / Dashboard |
Actual Service Level | The Output. The reliability percentage you actually achieved. Measures past performance. | Product Details Page |
❓ Frequently Asked Questions (FAQs)
Why shouldn't I set my Target Service Level to 100%?
Achieving 100% availability requires an exponentially large amount of Safety Stock to cover every possible theoretical spike in demand. This is usually not financially viable. Most companies aim for 95-98% for their top items (Category A) to balance availability with healthy cash flow.
Does a 95% Service Level mean I lose 5% of my sales?
Not necessarily. It means that 5% of the time, the item is not immediately available from stock. Customers might still order it on backorder or wait, depending on your business model, so the actual lost revenue might be lower.
I increased my Target Service Level. When will I see the results?
Changing the target immediately increases the Safety Stock requirement in Optiply, which will generate new purchase advice. However, the Actual Service Level (the score of the last 30 days) will take time to improve as the new stock arrives and stabilises availability.
Why is my Product Service Level low even though I just ordered stock?
The Product Service Level looks at the past 30 days. If you were out of stock for two weeks before the new shipment arrived, your score will remain low until those "out of stock" days move out of the 30-day window.