Service Level Optimization Using ABC Distribution, Forecasts and the Packaging and Stowage Model through Lean Warehousing at a SME Marketing Company

Abstract

The commercial performance of a company is measured according to the service level of meeting its customer demand. In the case of Small and Medium-sized Enterprises (SMEs) focusing on distribution and marketing, this is directly associated with proper inventory and warehouse management, since their main processes and activities are developed in this area. This case study focuses on the application of the Lean Warehousing methodology through Demand Forecasting, Inventory Policies, and the improvement of the Picking and Packaging processes to increase service levels, based on the Perfect Order indicators at a SME retailer. The assessment analysis denoted that the current service level of the company was at 87.31%. This happens because some orders of the XYZ brand are not fulfilled correctly, which has generated costs for penalties and rejections at 11.04% of the annual turnover of the main products from this brand in 2019. It is expected that, with this methodology, the company's service level will reach at least 95%, which is the minimum to be in suitable conditions to satisfy customer requirements.