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Is your fill rate stalling around 90%?
Supply Chain teams implement a lot of initiatives to improve customer order fill rates. And it shows. They typically improve the fill rate from below 80% to somewhere around 90%.
However, improving beyond 90% seems a tough nut to crack. Initiatives which worked beautifully seem to stop delivering incremental results. More sophisticated optimisation doesn’t work. Efficiency improvements don’t move the needle. Forecast accuracy stalls.
Why does it happen? And more importantly, what should the teams do now?
The reason why improvements stall is the limit put by various latencies. We take too long to notice demand shifts. We spend too much time in updating the plans to incorporate these demand shifts. And we take too long to execute.
If we want to go beyond 90% fill rate, we must make our supply chain more agile. Detect demand shifts early through Demand Sensing. Update plans faster through heuristics of inventory buffer resizing and dynamic replenishment. Execute fast by cutting down frozen periods and going for smaller batches.
Agility comes in handy when other improvement initiatives have served their purpose and stalled.