What Is a Service Level?

A service level is an assessment of the performance associated with a specific function within a business. Measuring this type of performance often involves considering how well a process or procedure is serving an intended purpose and helping the business move closer to achieving its stated goals. As a business tool, service level assessment is important to determining how efficiently a business is operating, as well as paving the way for identifying strategies that help to increase that level or standard and advance the company.

The concept of service level can be applied to just about every aspect of a business operation. One of the more common examples is with the operation of a call center. In this type of environment, responding to inbound calls in the most efficient manner possible is key to the success of the operation. To that end, standards and goals are set that help to minimize hold times and also reduce the number of abandoned calls sustained during a typical business hour. By evaluating actual data that shows how long callers held before being assisted and how many callers hung up after being on hold for an extended period of time, it is possible to determine both the current service level and also brainstorm on how to increase that level over time.

Evaluating the service level is also an important component in supply chain management. In this scenario, properly assessing the level can aid in structuring supply chain tasks in a manner that ensures enough inventory is on hand to meet immediate needs. At the same time, an equitable service level requires that ordering is arranged to ensure that replacements to that inventory are received in a timely manner, and that no interruption in the production process takes place as the result of a lack of available inventory.

At its core, service level is all about making the most prudent use of available resources so that the goals of the company are realized. Customers receive support when and as desired, goods are produced in a manner that is both efficient and cost-effective, and the general quality of service and support offered is sufficient to inspire customer loyalty. The scope of service level encompasses everything from contracts with clients to producing quality products that are delivered on time every time. Businesses that wish to continue expanding pay close attention to the service level provided at each phase of the operation, and continually look for ways to improve the operation so a higher level is achieved.