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Value Chain & Operations

Service & Supply strategy

Establish product and channel service levels and define the ideal MTS/MTO mix that delivers market strategy

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How

SHAiPE: the LTPlabs framework

  1. Set the Decision

    • Define commercial priorities

      which products, channels, and customer segments to differentiate

    • Align on strategic priorities amongst commercial, supply chain and finance teams

      service level vs. cost to serve

  2. Highlight what matters

    • Map current baseline and performance gaps

      Service level/OTIF, OEE, inventory

    • Establish ideal cost-to-serve vs. margin by segment

      product, segment, market segment

    • Define constraints

      capacity, lead times, MOQs, safety stock rules

    • Align success metrics

      service level, inventory rotation, OEE, cost-to-serve

  3. Augment with AI

    • Simulate service costs trade-offs across MTS, MTO, and hybrid strategies to prescribe the optimal supply mode per SKU × segment

    • Data
      Historical demand
      Throughputs and setups
      Market strategy
      Current inventory
      AI Model
      Results
      Expected OTIF service level
      Production resources usage
      Inventory evolution
  4. Prototype your solution

    • Run digital-twin tests against historical performance to calibrate

    • Build a scenario generation interface allowing supply chain leadership to test and validate service/cost trade-offs

    • Pilot with a subset of segments / channels to real life validation

  5. Expand to scale

    • Define the implementation plan, with tight control of

    • Link ERP-like systems to upstream & downstream integration

    • Train supply chain and commercial teams on the new process

    • Establish review cadence aligned with S&OP cycles

    • Monitor KPIs continuously and refine segmentation as market dynamics evolve

Nutshell

What this means for your business

5%

cost to serve

  • Higher service level (OTIF / fill rate) where it matters most, without increasing the cost to serve

  • Reduction in working capital by eliminating MTS overstock on low-demand, low-margin SKUs

  • Supply strategy aligned with commercial segmentation; every service level decision anchored on company strategy

Insights

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