Dr. Benedikt Schulte receives BME Science Award22.03.2018
Benedikt Schulte, former researcher at the Chair of Logistics and Quantitative Methods, received the 2018 Science Award of the Association for Supply Chain Management, Procurement and Logistics (BME) for his thesis “Integrated Segmentation of Supply and Demand with Service Differentiation”.
In his paper-based dissertation, Dr. Schulte examined how companies can better match their internal supply with customer demand by means of so-called service-level menus. His research, which addresses a topic that is highly relevant for companies from different industries, encompasses both methodical contributions, such as novel mathematical solutions calculating the service levels of a certain inventory-management policy, and conceptual findings, e.g., under which circumstances service level menus can lead to substantial increases in profits.
Dr. Schulte began his dissertation project in 2012 at the Chair of Logistics and Quantitative Methods of Julius-Maximilians-Universität Würzburg. Prior to his research work Dr. Schulte worked at a leading global management consulting firm. He holds a master’s degree in Mathematics from the University of Bonn.
Abstract of the Dissertation:
This thesis addresses the integrated segmentation of supply and demand with service differentiation by means of service-level menus. To this end, it establishes a joint perspective on the market side - that is, prices and service levels - and the operations side - that is, the inventory management policy and the corresponding parameters. Because developing such a joint perspective involves the study of various complex and interrelated problems, this thesis proceeds in three steps. The first step focusses on the operations side, studying how to manage multiple service levels and how additional customer classes (or offerings) affect the required inventory. The second step addresses the relationship between the market side and the operations side by studying the joint optimization of price and inventory (without service differentiation). The third step concerns when the introduction of a service-level menu increases profits over that of a single undifferentiated offering and how to design optimal service-level menus.
Besides other insights and methodical contributions, the results presented in this thesis show that, in many cases, service differentiation does not increase profits significantly. One way to interpret this finding is that differentiating customers based on service levels alone is a weak differentiation lever only, that is, the price differences between offerings with differing service levels need to be small in order to prevent customers from switching to offerings with lower prices and service levels. Therefore, successful price differentiation requires service differentiation's being supported by presence of additional conditions or measures (e.g., pricing restrictions or further differentiation levers). Indeed, our research also shows that service differentiation can significantly increase profits if the company experiences pricing restrictions.