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Today’s consumers have unprecedented shopping options. Now more than ever, retailers must differentiate by providing a superior shopping experience. Whether customers walk away satisfied—or have to look elsewhere to make their purchases—hinges directly on a retailer’s in-stock positions. But while having the right product in the right place at the right time remains undeniably critical, Wall Street demands superior inventory productivity. Traditional approaches to allocation and replenishment are no longer adequate to meet the requirements of the modern retail landscape. A next-generation allocation and replenishment management solution is necessary for retailers to meet increasing expectations for in-stock levels and inventory productivity.
In today’s business environment, retailers face a wide range of challenges when planning and delivering goods to maintain high levels of customer service with lower inventories. Missing revenue opportunities is not an option, especially when it’s due to the right product being unavailable.
Some of the key challenges faced by retailers today include:
- Stock-outs/lost sales for some items; excess inventories for others
- Case pack configurations that are not optimized with store needs
- Inventory plans that don’t consider demand and supply variability
- Lower inventory turns and customer-service levels
- Difficulty in managing ever-growing combinations of SKUs across stores
- Receipts-driven philosophy
- Limited promotions effectiveness
The i2 Solution: i2 Allocation and Replenishment Management
i2 Allocation and Replenishment Management is a comprehensive inventory management and distribution solution for retailers.
Allocation and Replenishment Management provides the rich set of capabilities required to tackle today’s challenges and provide a leading edge to retailers so they can better serve their customers and compete effectively.
Capabilities of i2 Allocation and Replenishment Management can include:
- Time-phased demand and replenishment plans that provide visibility into inventory investment and product flow over time, enabling effective collaboration within the organization and with vendors (connected model to support direct-store delivery, vendor-DC-store, vendor-XDock DC-store)
- Highly scalable, multi-period allocation and replenishment planning for both solids/eaches and case-packs/mix-packs
- Inventory analysis and optimization—segmentation of products, order policy/target service-level determination and “what-if” scenarios, calculation of optimal levels, multi-echelon strategy
- Simulation capabilities—based on financial investment, service level, and safety stock interplay
- Support for both hard supply chain constraints (such as item availability; shipping, receiving, and location calendars; effectivity dates; and pack multiples) as well as soft constraints (such as handling and storage capacity at distribution centers and stores, and vendor minimums), with a restricted subset available for interactive plan overrides
- Advanced techniques (in batch mode) for replenishing slow-moving SKUs, including calculating replenishment parameters based on average rate of sale, presentation stock, lead time, and review times
- Integrated planning for turn and promotional items (in batch mode) to ensure coordinated flow and adequate supply for promotions
- Multiple replenishment policies to cater to diverse product segments—reorder point/reorder quantity, reorder point/up-to level, reorder point-to-future target level, min/max, min on hand for different product segmentations
- Item linking and substitutions—one-way, two-way, phase-out, multiple linking, sudden-death, effective date
- End-of-season “must-ship” logic to push excess inventory
- Automated purchase order approval based on business rules
- Prioritization can be made on which orders, locations, or customers receive inventory first
- Robust exception-management framework with decision support for expedite candidates, increase supply, increase capacity, and potential stockouts
Benefits of i2 Allocation and Replenishment Management solution can include:
- Consistency in managing inventory levels holistically across the supply chain across multiple time periods
- Better in-stock positions resulting in higher customer service levels and better promotional effectiveness
- Reduced inventory levels with optimal inventory investments
- Increased inventory turns
- Reduced stock-outs and markdowns
- Efficiency in logistics and distribution costs by better planning around constraints involving storage, handling, container load building, and vendor capacity
- Overall business/productivity improvements due to managing by exceptions and rapid re-planning
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