Scenario: Supply segmentation allocation rules

You can create segmentation allocation rules to balance demands across your inventory network.

Depending on the conditions that you set, you can create rules that apply a ranking order to segments. Also, you can create rules that schedule different allocation levels for product rollouts. For more information, see Managing inventory segmentation rules.

Example 1: Default or nonscheduled inventory segmentation allocation rule

Any inventory segmentation allocation rule must contain a minimum of one condition. If there is an allocation rule that is defined without any schedule, it is considered to follow default schedule. Suppose that there is a company, Company1 that wants to setup an allocation:
  • Rank 1: 40% to Segment1 with minimum quantity of 100
  • Rank 2: 10% to Unsegment
  • Rank 3: 20% to Segment2 with minimum quantity of 300
  • Rank 4: 30% to Segment3
Both Segment2 and Segment3 are external vendors with an applicable sales commission for the order accepted. This is why the Segment1 allocates the maximum segment to maximize profitability.
Assume that the tenant level allocation schedule is at 12am and there is no inventory update for any of the items.
Figure 1. Segment allocation rule
Inventory segmentation allocation rule
Table 1. Distribution table
Before segmentation After segmentation
Unsegment1 = 700 qty Unsegment1 = 100 qty
Segment1 = 200 qty Segment1 = 400 qty
Segment2 = 100 qty Segment2 = 300 qty
Segment3 = 0 qty Segment3 = 200 qty

At 12am, the system detects a total of 1000 quantity across all segments and each of the segment are then distributed in the order defined. The results are as follows:

  1. Segment1 - 40% met and minimum quantity not applied = 400 qty
  2. Unsegment1 - 10% met = 100 qty
  3. Segment2 - 20% met but the minimum quantity is 300 = 300 qty
  4. Segment3 - 30% unmet but insufficient remaining quantity = 200 qty

Since Segment2 has a higher rank with a minimum quantity defined, the extra quantity is allocated that leads to lesser amount at Segment3. If there was no minimum quantity defined at Segment2, then Segment3 could have received the full 300 qty instead of 200 qty.

The system supports a non-zero minimum quantity with 0% distribution. For instance, Segment2 might have 0% allocation but with a minimum quantity of 300 qty.

Example 2: Ranking in inventory segmentation allocation rule

When you define multiple allocation plans, each plan is assigned a rank. Within each plan there are several segments that are assigned and each of these segments has a priority.

Suppose that there are following rule conditions:

  • Rule 2 at Rank 1
  • Rule 3 at Rank 2
  • Rule 1 at Rank 3

The system runs the rules in the order of the rank - Rule 2, Rule 3, and Rule 1.

Example 3: Prioritizing between scheduled and nonscheduled rules

You can prioritize the inventory allocation plan by configuring the ranks between scheduled and nonscheduled rules.

The system supports a maximum of one scheduled and nonscheduled default rule for the same condition. If you want to add a second rule, the existing rule needs to be removed first.

Example 4: Scheduling different allocation levels for a product rollout

During a product rollout, Vendor1 can prioritize its channel to the local store before sharing the inventory with partners where Vendor1 can set a scheduled allocation rule. On the first month of the product roll out, Vendor1 can configure following two rules:
Default rule
Consider the following allocation for Item01:
  • Vendor1: 50%
  • Vendor2: 20%
  • Vendor3: 30%
  • Unsegmented: 10%
Scheduled rule
Consider the following allocation for Item01 in Month1:
  • Vendor1: 80%
  • Vendor3: 20%
  • Vendor2: 0%
  • Unsegmented: 0%
Segmentation percentage

The quantity between 1st and 2nd month changes based on the new distribution if the end date of Month1 is 30 January and the new allocation rule takes effect on 1 February.

Example 5: Day1 segment allocation based on availability picture

The quantity for inventory allocation to the segments is based on both supply and availability. You can enable effective supply allocation as the quantity changes for every allocation.

For example, there are 1000 quantities and 40% segment is reserved for Store1. If there is no change in supply, then the maximum quantity that can be allocated to Store1 is 400 quantity on the first Day1. At the end of Day0, if Store1 made a sale of 400 quantity and no shipment occurs, the results is in a static supply picture for Store1. Even though 400 quantity is created in demand, the supply does not change so the max allocation remains at 400 when availability is not considered.

The segment allocation plan considers the current availability picture at the time of the run so that any demand can be accounted that results in more quantity available for sell on Store1. However in this case, since the demand of 400 items is created, the allocation agent considers the availability picture for Store1 as follows:
400 (supply) - 400 (demand) = 0 item - availability
Effectively, 1000 - 400 = 600 quantity is the remaining supply for segmentation that results in Store1 receiving 40% of 600 = 240 quantity. This totals to 400 + 240 = 640 qty assigned to Store1 on Day 1.
Note: The demand also includes active reservations regardless of its expiration.