Product Allocation Functional Overview
Product allocation functionality allows you to manage the supply of scarce products to customers so that each customer receives an allocated amount
Functional Overview
Analysis of the Allocation Process
Prior to being able to establish any rules, data, or configuration for the strategic allocation of products, one must first evaluate the underlying business process that is driving it.
Most importantly, a decision must be made as to how allocation is to be done.
This process can be facilitated by addressing the following issues:
Supply and demand are key components of any customer order management system. In an effort to establish and maintain competitive customer service levels, suppliers must focus on filling a Customer’s order on time for the desired quantity.
Certain circumstances can arise however, where on hand and expected inventory will not cover the demand for a particular product or group of products. Production problems, unexpected demand, short product life cycles, or scarce raw materials can all cause this situation.
When this occurs, allocation tools are required to distribute the inventory across competing demands. An allocation plan must allow for fair share distribution as well as the ability to focus on key markets and key accounts.
Use
Product allocation functionality allows you to manage the supply of scarce products to customers so that each customer receives an allocated amount
Functional Overview
Product allocation functionality combines the planning and tracking tools of the Logistics Information System (LIS) with the real time available to promise functionality in sales order processing.
In the LIS system, users are able to define a custom planning hierarchy for allocations. Hierarchy levels such as sales organization, customer group, market, and customer can be selected. Once the hierarchy is established, the allocation quantities can be planned at any level.
For example, allocations could be planned down to the market level and then down to the customer level for two key accounts in that market. Consistent planning tools in LIS allow for bottom up as well as top down planning.
An active check against planned allocations is carried out in sales order processing in addition to the available to promise check.
Based on the delivery date of the item, the system ensures that the ordered quantity does not exceed the period allocation. If this occurs, the system is able to propose future delivery dates when the quantity can be supplied. Actual quantities are then updated in the Logistics Information System for the allocation period.
The allocation check is also carried out during the rescheduling function. Reporting tools in LIS can provide useful information regarding status during an allocation period.
Prior to being able to establish any rules, data, or configuration for the strategic allocation of products, one must first evaluate the underlying business process that is driving it.
Most importantly, a decision must be made as to how allocation is to be done.
This process can be facilitated by addressing the following issues:
- At what level of the sales structure is allocation to be established? List the levels in order of importance for the hierarchy. (Up to 8 levels) Material/ Sales Organization/Customer
- How are allocation preferences to be established? What groups receive what percentage of the overall allocation quantity? E.g. Sales Organization 1000 = 70% and all other sales organizations split the remainder. For what time period is allocation to be active? E.g. 01/01/2016 - 10/30/2016
- Are unused quantities from prior periods to be included in the available quantity calculation for the current period? If so, what is the size of the allocation interval? I.e. How many past and future periods are to be included in the allocation scenario?
- Is the allocation check to be a single level check or are multiple levels of checks to be evaluated?
STEP 2: Evaluate the allocation quantities for the requested customer
