Growing importance of dynamic inventory allocation

Satisfying customer demand while minimising inventory investment and maximising margins is no easy feat – that’s why today’s omni-channel retailers require dynamic inventory allocation

By Guest on 06 November 2015
Growing importance of dynamic inventory allocation

This article first appeared in the Autumn 2015 issue of OnWindows magazine.

The nature of today’s operating environment requires retailers to be nimble and flexible – dictating that they take a close look at the processes and systems that move and manage their inventory in order to support new fulfilment strategies such as ‘ship from store’ and ‘click and collect’.

Allocation planning is the primary business process for distributing and positioning inventory, and the complexity created by moving to an omni-channel model is challenging many current allocation systems. With this in mind, there are a number of factors which retailers need to consider when evaluating a new advanced allocation solution. The attribution of sales is a key component in driving optimal stock distribution across the supply chain. The allocation system, therefore, needs to consider not only where a sale was made, but where the demand was fulfilled from in order to suggest the optimal allocation of future stock.

Today’s market requires insight into near-future demand to drive store allocations. Consuming information about anticipated demand supports projecting orders to stores in the future and supports and accelerates managing goods through the supply chain in an optimal way. Through ­non-hierarchical attribution, flexible allocation solutions are able to model trends and demand to maximise sales potential through accurate allocation of stock.

Flexible supply chain configuration is also essential. Traditionally supply chains were very linear and fairly straightforward to setup. But today, they must be nimble with inventory able to move forward, backward and sideways to be properly positioned. Configuring modern supply chains requires support for complex rules within the allocation system.

What’s more, inventory needs to flow through the supply chain faster. Retailers can no longer wait for inventory to arrive at distribution centres before decisions are made to disperse it to stores. They need the capability within their allocation system to pre-allocate inventory from purchase orders in order to reduce lead time. Moving from ­channel-specific inventory to shared inventory across channels enables retailers to react to variability in where demand occurs. Effectively fulfilling on variable demand requires having complete visibility into inventory at every level of the supply chain.

The integration of the allocation solution to an assortment plan is integral to producing an allocation result that represents the merchandise story in stores and ensures the correct colour and sizing choices are available to the customer. The integration of these two solutions also ensures a seamless cut over between planning and execution of an assortment.

JustEnough’s Allocation solution has been designed to help retailers plan for and succeed in this dynamic, highly competitive environment. Our solution addresses all of the above allocation and supply chain complexities with flexibility and ease.

Keith Whaley is vice president of retail strategy at JustEnough

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