Segment allocation plan
Inventory segment allocation helps you to distribute inventory automatically. It is based on a specific set schedule, a manual trigger, or when specific actions are completed, such as supply synchronization. By setting up allocation rules, you can prioritize the percentage of inventory to segment across the various channels. Then, depending on the conditions that you set, the rules are considered to allocate the inventory to specific segments. You can also reallocate your inventory across segments automatically by using time intervals or triggers.
You can complete an inventory update for a segment manually or use the automated process that is provided by the segment allocation plan. When you identify the correct distribution of inventory across segments, you might not require an external integration to determine the inventory assignment for each segment. A segment allocation plan consists of allocation rules, allocation strategy, and rebalancing frequency. When you activate the plan, the system reviews the allocation rules automatically and identifies a pool of inventory for supply allocation. Then, the inventory distribution is run that is based on the allocation strategy. The frequency is set to run routinely, for example, every 12 hours, or it is triggered manually by an external system or as required.
An inventory allocation plan includes:
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Allocation rules: A rule is a condition that is set to determine which item is allocated to the allocation process. For example, you might decide that only node01 and item01 participate in the automated allocation process. For a list of supported rule conditions, see Segmentation allocation rules.
Allocation strategy: The strategy provides sets of instructions that describe how inventory is distributed across the participating segments. The segment distribution strategy supports priority, percentage, and minimum allocation quantity. The strategy ensures that inventory is assigned to segments that are valued highly. As demands are handled in the system, the allocation is based on a real-time availability value rather than supply. This ensures that each segment always has enough inventory available to sell that is based on the predefined percentage in the rule. If a segment has a high, sell-through rate, the system ensures that the inventory is rebalanced. Rebalancing is based on the frequency that is defined to mitigate the risk of backorders that are placed in higher segments.
After you define the allocation plan, you can adopt multiple strategies to rebalance inventory segments to run the next segment allocation. For more information, see Segment rebalancing.
- Allocation agent
- Externally triggered allocation
- Allocation during supply synchronization request
- Segment rebalancing time
- Segment rebalancing trigger
- Supply synchronization
- Routine allocation refresh
- Enables the system to run segment allocation on a fixed schedule, such as every 24 hours. This schedule allows an oversold segment to obtain more inventory to boost sales. This also minimizes the effort to trigger the allocation manually.
- Inventory freeze time
- Some businesses mandate that inventory is static for a period, such as one month, to ensure that each segment has the opportunity to accept new sales. In these circumstances, as an inventory manager, you can set up a higher allocation rebalancing time. In extreme cases, you can set the time to a high value so the allocation occurs only during a manual trigger.
- Hot inventory
- When an item undergoes an unexpected high demand, you might trigger segment reallocation manually by using an API. This ensures that the specific item is rebalanced.
- New inventory arrival:
- As inventory is received at the warehouse, you can issue a segment rebalancing request by using the supply synchronization request. As you have recorded the total inventory count already, you allow the system to distribute this according to the predefined plan. Sometimes, where allocation is not desirable, you might opt to skip the allocation during the supply synchronization request.
- External integration triggers:
- If you want the business mandated allocation to complete based on external events, you might use an integration to trigger the allocation for specific items or locations, as required. For example, when low inventory is detected.
Fine-tuning the frequency of reallocation is essential. This prevents the risk of stockout in any segment, especially if the inventory sell rate is low in comparison to other segments. To enable segment rebalancing, see Enabling inventory segmentation allocation and rebalance frequency.
Segment allocation planning
In Sterling Intelligent Promising, when segmented quantity is insufficient, you can create an inventory segment allocation plan to apply segmented and unsegmented inventory. You can create custom segment types to allocate your inventory across segments. Then, you define whether the custom segment types consume inventory from the unsegmented inventory or not. Unsegmented inventory is only considered when the stock in segmented inventory is insufficient for order fulfillment.
- Participating item and fulfillment nodes.
- Segments that are included in the allocation strategy.
- Frequency of the allocation.
- Duration windows when the allocation is valid.
- Ranking that is applied or that takes precedence in the allocation rules.
Although the supplies are reallocated among participating segments, it is important to know that the allocation is calculated only on the availability of an item. As a result, the system can minimize the risk of stockout in high demand segments. Then, inventory is rebalanced gradually from less popular segments to those segments that are in demand. This results in an increase across the overall sell-through rate in the fulfillment network.
The segment allocation frequency plays an important part in supporting your order capture system. As a higher allocation rate minimizes a stockout occurrence, you must find a balance to ensure that each segment has equal opportunity of participating in the sales cycle.
To ensure that segments are included in the allocation strategy, you must configure the segments by using the UI or the Create Segments API. For more information, see Configuring segments and the Create Segments API. For example, if you are a shampoo supplier, you might want to create segments to represent pharmaceutical chains and department store chains to ensure that the inventory is isolated. When orders are received in the system, the demand is stamped with an explicit segment. This demand is only fulfilled when there is a match with a supply segment.
For more information about running the allocation plan, see Segment rebalancing.
Benefits of inventory segment allocation
Inventory segmentation helps you to boost profitability directly as it minimizes stockout risk on a higher tier segment and rebalances excess inventory from other segments. This ensures that the high-demand regions are supplied that drives optimal inventory turnover and costly holding expenses are reduced. For example, stores can segment their inventory to cater to markets, such as B2B, B2C, and premium customers to enable effective inventory management. This ensures that every segment receives appropriate stock allocation based on specific needs and priorities.
You can configure the segment allocation rebalancing frequency to run on a defined schedule or a manual trigger. Also, you can activate a segment allocation plan. For more information, see Enabling inventory allocation and rebalancing frequency settings.