Inventory Allocation Software

As inventory is retailers’ most important and capital intensive physical asset, many leading retailers are leveraging inventory allocation software in order to ensure the right products are in the right place at the right time. Achieving this goal results in higher sales and customer service levels, less out-of-stocks and lost sales, and fewer markdowns and promotions to reduce inventory. And the challenge is only getting more complex with all the browsing, purchasing and fulfillment options that consumers have to pick from. How to ensure the right products are where they need to be to meet customer demand can seem puzzling. Inventory allocation software can help retailers to simplify and solve this puzzle.

In the past, inventory was often sent to stores in large quantities at the beginning of each season, with the hope that it would sell before the start of the next season and the introduction of new products. However, with today’s sophisticated inventory allocation solutions, retailers now have the ability to allocate products based on forecasted demand and current stock levels and then replenish based on actual demand once products start to sell.

Retail inventory allocation software provides retailers a way to accurately execute on their merchandise plans at the store level by creating a balance between current inventory and future demand. Retailers also need to take into account allocating products to distribution centers for order fulfillment and inventory replenishment. Getting this right helps to maximize full-price sales by having the right inventory at the right place and helps to reduce the markdowns and promotions needed to sell off excess inventory or the costs of transferring it to other locations. Let’s take a further look at how to improve retail inventory allocation performance.

Retail Inventory Allocation Based on Demand

Retail Inventory Allocation

The last thing a retailer wants is a customer coming into a store only to be disappointed because what they want is not there. This lost opportunity at the moment of truth oftentimes results in the long-term loss of a customer. Retail inventory allocation software is designed to avoid this misstep.

When allocating inventory one must rely on demand forecasts. Taking a one-size-fits-all approach to allocation can result in costly errors. Retailers are recognizing this and are looking to inventory allocation software to help infuse customer demand into their allocation process. A successful allocation process incorporates forecasts, replenishment orders, as well as real-time POS data, to ensure inventory accuracy across stores and warehouses.

The right inventory allocation solution is critical to help retailers determine the optimal mix of inventory to push to store locations, as well as knowing when to hold inventory back from stores. When possible, retailers should employ a “hold-back” strategy where some inventory is allocated to stores initially while the remaining inventory is “held back” in distribution centers. After several weeks of actual sales data is available, retailers will know what products are selling where and can then push out additional product to where it stands the best chance of selling. Holding some inventory back instead of pushing it all out to the market at once gives retailers the flexibility to react to shifts in consumer-buying and store-selling behaviors.

Retail Inventory Allocation & Replenishment Working Together

Not only is allocation a key function to move product to stores; replenishment also has a part in this process. Allocation deals with the beginning of a merchandise assortment season and is used to get initial inventory level into channels. Replenishment can take over from there “pulling” inventory based on actual sales data.

To maximize sales and improve service levels while lowering inventory investments, retail inventory replenishment software complements the allocation process. Once the performance of a product or category is determined, replenishment makes sure that inventory stock is available in stores to meet on-going demand. A best-in-class replenishment solution will result in improved inventory turns and in-stock availability providing your customers with the products they want, when and where they want them.

Retailers need to look for a solution that produces a forward-looking, time-phased ordering plan that include the demand forecast and inventory plan. A flexible and effective solution will take into account safety stock, fluctuating demand, vendor minimums, seasonality and lead times, as well as any other factors needed based on your own business requirements. Ultimately, this important step in the process maintains proper inventory flow downstream while optimizing order and line-item fill rates to avoid overstocking.

JustEnough Allocation

JustEnough’s inventory allocation solution takes the guesswork out of allocating products to stores where the products have the best chance of selling. JustEnough forecasts customer demand and considers current stock levels at each location and what has already sold. It then calculates both the optimal inventory to send to each location and how much to reorder across the supply chain.

With an Allocation Review and Allocation Rules Management tool, the system allows you to easily manage all aspects of the process. Allocation review is a graphical system that suggests allocations for planner review by pre-defined rules. The result is improved productivity, improved turnover and reduced spend. The allocation rules are defined by the unique needs of your business. Based on either push or pull methodology, these rules can be based on sales and stock data, promotional, full price or markdown sales or any other combination to determine exactly where to allocate inventory.

Benefits of JustEnough Allocation

  • Fewer out-of-stocks
  • Improved customer service levels
  • Increased inventory turnover rates
  • Reduced inventory overstocking
  • Less waste and markdowns
  • Decreased transfer costs
  • Improved productivity and decreased planner workload

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