Project Description

Traditionally, retailers have looked at planning, allocation, and replenishment as three distinct disciplines within the business. In our opinion, this approach misses a significant opportunity to reduce inventory, improve service levels, and increase revenue. Working together and focusing on leveraging a single unified demand signal, these three groups can dramatically change the value retailers create for their shareholders.

Rethinking the Traditional Approach

When considering planning, allocation, and replenishment, we need to rethink the traditional approach of allocating against pre-season plans and min-max replenishment models that only reward unit sales. Retailers must instead focus on leveraging predictive demand analytics to influence planning and omnichannel fulfillment decisions.

The opportunity includes the following key elements:

  • Leverage a unified demand signal to build better financial and assortment plans, using more than just last year as a driver
  • Incorporate demand analytics to drive more responsive pre-season and in-season allocations
  • Utilize predictive forecasts to drive replenishment processes that support an omnichannel environment

Adapting your end-to-end process to leverage a unified demand signal will create consistency throughout the planning and fulfillment processes, using the best data and analytics to support a forward-looking business process.

Recommended Reading

Understanding Consumer Demand

Understanding Consumer Demand

Demystifying the Centralized Demand Signal

Demystifying the Centralized Demand Signal

The Demand Intelligence Advantage

The Demand Intelligence Advantage

From Silos to Collaboration

Making the leap from siloed organizations, measured independently and using disparate solutions, to a single process based on an intelligent demand signal is going to take some effort.

The first step is defining the end-to-end planning, allocation, and replenishment process and determining the common metrics on which to measure the process. This will depend on the current state of your systems and the visibility and information available to your planners, allocators, and replenishment analysts as they perform their work. This will also depend on the flexibility to incorporate a demand forecast into the allocation and replenishment execution.

From an organizational perspective, this change will require buy-in from both the buying/merchandising and supply chain executives in the company. With strong collaboration, both benefit in the short term. The buying executive gets better visibility to demand and maintains higher service levels, while the supply chain executive reduces overall inventory in the network and carrying costs.

Final Word

Incredibly, the retail industry has not yet solved the problem of eliminating the traditional siloed nature of planning, allocation, and replenishment. With billions of inventory dollars invested in the supply chain at any point in time and trillions in logistics costs each year in the US alone, it’s time for a transformational change.

Related Case Studies

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New Merchandise Hierarchy Improves Planning and Allocation

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Allocation Process Redesign and Organizational Enhancements

Merchandise Planning, Allocation, and Size/Pack Optimization Software Selection

Merchandise Planning, Allocation, and Size/Pack Optimization Software Selection

Contact

Clay Parnell, President & Managing Partner

Clay Parnell
President & Managing Partner

The Parker Avery Group is a leading retail and consumer goods consulting firm that transforms organizations and optimizes operational execution through development of competitive strategies, business process design, deep analytics expertise, change management leadership, and implementation of solutions that enable key capabilities.

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