OPTIMAL ALLOCATION
Even though Allocation and Replenishment are usually mentioned together,
there is a significant difference between the two processes.
Replenishment is a process of maintaining desired inventory levels for existing products
and locations in cases when there is enough inventory available to satisfy consumers’
demand.
Allocation is a process that requires making decisions when
1. a product is allocated for the first time (no sales history) and/or
2. there is not enough inventory available to satisfy the demand in all locations.
CHALLENGES
In the first case, it is necessary to determine the optimal quantities for each location
without any knowledge on the previous product performance. How will the product be
accepted by customers in different geo-demographic areas? If you ship too much, you’ll
increase your risk of markdowns to clear out the excess. Almost as bad, if not worse, if
you don’t send enough to the right locations, you’ll put sales and profits at risk.
In the second case, trade-offs have to be made to optimally distribute the scarce inventory
to optimize the performance and assortment, given the existing inventory distribution.
Other questions that require answering during the allocation process are:
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Will a product sell similar to an existing product or a predecessor?
If a style is available in several colors, then what is the distribution of the color palette?
How to tie the initial allocation in with the optimal size patterns and pre-defined packs?
Not to mention the associated challenges of finding the optimal
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first (or one-time) purchase quantity
initial pricing
in-season intra-store assortment and stock balancing
markdown strategy
* See the corresponding Retalon booklets from the Fashion Essential series for more on these topics.
RETALON OPTIMAL ALLOCATION
The Retalon Allocation System assists users
in placing the products (Style/Color/Sizes)
into the right locations and in the right
quantities
to
optimally
address
the
challenges described above.
The system allows you to create allocation
scenarios that cannot be handled through an
auto-replenishment process. The workbook
with the scenario results specifies what
quantities of each product should be
allocated to what locations and in what
order.
RETALON OPTIMAL ALLOCATION SYSTEM FEATURES
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Supports allocation not only at the SKU level but also at a category level (e.g.
at a style level).
Accounts for all available quantitative data, including performance of Products
and Categories at different levels, Inventory levels, Min/Max, Seasons,
Promotions, Packs, Sizes
Is based on product attributes, such as color, fabrication, ad hoc groups, etc.
Has ability to schedule allocations and e-mail the allocation results (by store or
by category)
Has capacity to save and re-use user-defined allocation rules for future use
Supports multiple pre-built scenarios, such as “fill up to a certain quantity”,
“optimal quantity”, “fill up to forecast”, “in fixed quantities”, “in equal
quantities”, “proportional to sales of a category or of an alternative product”,
and others
Supports allocations based on store contribution codes, store attributes, and
store capacities
Executes a sequence of allocation rules in one batch
Allocates multiple products in a single allocation operation
Reports allocation deficit (based on available or effective inventory)
A well-executed allocation strategy is a crucial and challenging process in the
management of a supply chain. The allocation task requires an instant analysis of
large amounts of constantly changing data on products and stores. The Retalon
Optimal Allocation system ensures high customer service levels, minimizes lost sales
and customer frustration, and guards against excessive inventory.
ALLOCATION IS A CHALLENGING PROCESS. CALL RETALON NOW.
ALLOCATE YOUR TIME WISELY. IT IS NOT REPLENISHABLE.
www.retalon.com - Call 1.905.482.9605 - Toll Free 1.888.837.0268 - e-mail [email protected]