Allocation
- Allocation vs Replenishment
- Allocation Logic
- Incoming PO’s
- Create Allocation Proposal
- Warehouse Stock
- Review and Confirm Allocation
- Allocation Overview
- Re-allocation
- Allocation Assortment
- Settings
- Forecast
The AGR Allocation module is a part of the Inventory suite. The module provides a good overview over the allocation processes as well as more control over the allocation, without making these processes too manual. There are many factors that can affect decision making when allocating and the processes of allocating products can be time and resource consuming, so with the AGR Allocation module these processes become more automated.
Allocation is the initial process of distributing products upon delivery from suppliers out to stores. There is pre-defined quantity that needs to be allocated and AGR proposes how to allocate the products based on where they are most likely to sell. This allocation method can also be used for products that are already in the warehouse that needs to be pushed out to stores.
In allocation, we have a pre-defined quantity that determines the total quantity that should be pushed out while in replenishment the quantity that is sent out is based on demand from stores. Each store receives as much as it needs to cover future demand.
Allocation vs Replenishment
When allocating, a push method is used which means that we have a pre-defined quantity that determines the total quantity that should be pushed out to stores. When replenishing products, a pull method is used, meaning that the quantity that is sent out to stores is based on demands from stores where each store receives as much as it needs to cover future demand.
Allocation Logic
The logic that we use to calculate the allocation proposal is called Allocation Mix %. Allocation Mix % is how we divide our products between stores, based on where they are most likely to sell.
Statistical and manual forecast is used that looks at sales for each product/ product group down to each location. Seasonal and other deviations in sales are considered. One example is a grocery store located in a summer vacation area has high sales of fruits during summer. It therefore has a high Allocation Mix % during the summer period for fruits, but over the rest of the year the Allocation Mix % for fruits is lower.
Incoming PO’s
In the first view is an overview of all incoming Purchase Orders (PO’s) showing the delivery status of each purchase order, purchase order number, quantity, delivery date, allocation status and vendor.
The PO Delivery Status helps to decide when to start the allocation process for the purchase order. This could be done for example few days before the purchase order arrives in the warehouse so that it can go straight out to stores upon arrival and doesn´t have to stop at the warehouse and take up space. This is a process that is called cross docking.
To continue with the allocation process, a purchase order number is selected to see the details of that purchase order and to create an allocation proposal.
Create Allocation Proposal
In this view more details of the purchase order can be found such as what products are in the purchase order and further details about the products.
Hold Back Percentage
Hold Back % is a default parameter that is set down to product group level but can be amended down to product in each allocation. Hold Back % means how much will be held back in DC for replenishment and to prevent over stocking stores.
Minimum Allocation Qty
Minimum Allocation Qty is a default parameter that is set down to product group level but can be amended down to product in each allocation. Minimum Allocation Qty is the minimum quantity each store should receive.
Allocation Method
In AGR we have two allocation methods, product group allocation and item allocation. Allocation based on product group sale can be used for example for new items with little or no sales history. The allocation mix is then calculated based on the statistical forecast of the product group. Allocation based on item sale can be used when we have an item with a sales history. The allocation mix then calculated using the forecast of that item. It is optional take stock and/or undelivered at stores into consideration in the calculations.
To help users to decide on which allocation method to use it is possible to see how many stores a product is open in, how many stores is has been sold in and the product’s first sale date. If a product has been sold in many stores for a long time an item allocation method might be optimal. However, if a product has been sold in none or few stores and for a short time, it might be better to base the allocation proposal on the product group forecast.
Allocation based on item sale is only available for customers that have or will implement the AGR Inventory module.
Warehouse Stock Column
If the product that is being allocated has stock in the warehouse it will appear in the WH Stock column. It is then possible to include that stock in the allocation by selecting “Include WH Stock”. The quantity from the purchase order and the quantity in the warehouse will then be allocated together.
Allocate Selected Purchase Order Lines
After reviewing the purchase order, all or some product lines can be selected to be allocated. The system generates an Allocation number after an allocation proposal has been calculated and the line that has been allocated will no longer be editable.
Products from more than one purchase order can also be allocated together in one allocation process.
Warehouse Stock
Warehouse stock can be allocated here and goes through the same process as when allocating purchase orders. Here we can see the stock in the warehouse for each product and either all units or parts of the stock can be allocated. The warehouse stock can be allocated with incoming stock. Allocated quantity can be amended by the user in the green column and will increase/decrease the hold back quantity. The hold back % was 30% so here the system holds back 72 units and allocates 168 units.
Review and Confirm Allocation
In this view we can see how the system splits the quantity between locations by using allocation mix %. Allocation mix % is calculated periodically by looking at the statistical forecast, by product group, by location, (by size). Seasonal trends down to location are included in the allocation mix % calculations, since we are using the statistical forecast. If only limited number of open locations can get their minimum allocation qty, the locations with the highest allocation mix % are in priority to fill up to their minimum allocation qty.
Allocated quantity can be amended by the user in the green column and will increase/decrease the hold back quantity. In this PO there are 600 units of this product. The Hold Back % is 30% so here the system holds back 180 units and allocates 420 units. These 420 units are then split by stores by using the allocation mix %.
After reviewing the allocation proposal, it can be confirmed which will transfer the orders to the ERP system.
Allocation Overview
While reviewing the allocation proposal, this view can be used simultaneously. The same data as is in the Review and Confirm Allocation view can be seen here but in a different way. The allocation number is selected in the dropdown menu. The data can be viewed for each store down to for example product groups or attributes, all depending on how the data should be presented. How the data is presented is controlled in the View Settings menu. The data can be in units or values.
Re-Allocation
After reviewing (and amending) the allocation proposal a need for a re-allocation might be necessary to allocate all remaining quantity. If the quantity from the initial allocation has been manually lowered by users for some or all stores, the remaining quantity that has been deducted does not automatically add to other stores.
Here we can see the initial allocation proposal.
Here the allocated quantity for the top 4 stores has been amended and reduced to 20 units for each store. The remaining units add to the hold back quantity.
An action to re-allocate the remaining quantity is an option and the system then splits the remaining quantity as well as hold back units between stores. Stores that have already been manually amended by users will be excluded in the re-allocation process.
The logic used for the re-allocation process is based on prioritization of stores taken from the initial allocation proposal. The prioritization looks at the highest calculated quantity and highest allocation mix % from the initial allocation proposal.
Allocation Assortment
This view is used for exception handling when allocating. The view is pre-populated with information on how products are ranged, that is in what stores they are open in. Here products ranging can be changed for stores during each allocation. The purpose is to make exceptions for each allocation proposal, a product might be closed for a location but for that particular allocation you might want to include the location.
Settings
In the settings view we have default settings down to product groups for Hold Back % and Minimum Allocation Qty. When new PO’s are created, they inherit those default values.
Forecast
In this view we can see the forecast for each store for each product group. This is a combination of the statistical forecast that is calculated by the system as well any manual changes that might have been done to the forecast.
When the system calculates the allocation mix, that is how the system splits quantities between locations, the user cannot affect those calculations. However, the allocation mix is based on this forecast that we see here so if the users want to be able to affect the split between stores, they can amend the forecast here which will result in different allocation mix.
Let´s say you are about to increase the size of one of your department in one of your stores. You want to make it bigger, increase the availability and aim for higher sales. It will take few weeks for the system to catch up on increases in sales due to your changes and therefore send more products. You can however manually amend the forecast for the upcoming weeks and therefore increase the stores´ share for that department when allocated. This is just a simple example on how you can affect the allocation calculations.
The forecast view can be customized to each customer´s needs. The amendments can be done on many hierarchy levels and on monthly, weekly or daily levels.