In terms of supply management, what does "fill rate" measure?

In terms of supply management, what does "fill rate" measure?

• A. The amount of inventory that is damaged
• B. The percentage of customer demand met without backorders
• C. The total number of items shipped annually
• D. The efficiency of a warehouse operation

Answer: (B)

Fill rate is a critical metric in supply management that quantifies the effectiveness of fulfilling customer demand. It specifically measures the percentage of customer orders that can be completely satisfied with available inventory, without the need for backorders. A high fill rate indicates that a company is proficient in managing its inventory levels and can reliably meet customer needs promptly, thereby reflecting strong performance in supply chain operations. By focusing on the ability to meet demand without delays, organizations can assess how well they are serving their customers. This metric is essential for maintaining customer satisfaction and optimizing inventory management practices. A robust fill rate minimizes the risk of losing sales due to stock-outs and enhances overall service levels, contributing positively to business success.

Fill rate is a critical metric in supply management that quantifies the effectiveness of fulfilling customer demand. It specifically measures the percentage of customer orders that can be completely satisfied with available inventory, without the need for backorders. A high fill rate indicates that a company is proficient in managing its inventory levels and can reliably meet customer needs promptly, thereby reflecting strong performance in supply chain operations.

By focusing on the ability to meet demand without delays, organizations can assess how well they are serving their customers. This metric is essential for maintaining customer satisfaction and optimizing inventory management practices. A robust fill rate minimizes the risk of losing sales due to stock-outs and enhances overall service levels, contributing positively to business success.