Explaining Retail Allocation Management

Objectives

After completing this lesson, you will be able to:

  • Describe the overall process of retail allocation.
  • Create allocation tables in reference to purchase order and from the available stock.
  • Elaborate on the functionalities available for managing the allocations.
  • Execute the follow-on process steps of retail allocation.

Merchandise Distribution Concept

Position of the Topic in the Complete Training Scenario

Scenario

The retail responsible merchandising manager, after reviewing the assortment plan, asks the allocator to create the store initial allocation for the new upcoming collection.

The allocator checks the current status of the PO and in reference to it creates the initial allocation table.

After the selling period begins, the allocator checks the results of the sales and creates another allocation.

At the end of the season he/she finally recalls the remainder of the stock from stores to distribution center (DC) in order to transfer it to the factory outlets.

The retail responsible merchandising manager, after reviewing the assortment plan, asks the allocator to create the store initial allocation for the new upcoming collection.

The allocator checks the current status of the PO and in reference to it creates the initial allocation table.

After the selling period begins, the allocator checks the results of the sales and creates another allocation.

At the end of the season he/she finally recalls the remainder of the stock from stores to distribution center (DC) in order to transfer it to the factory outlets.

Store Distribution

Retail allocation plans and controls the distribution of merchandise as a part of the Retail procurement process involving external suppliers, distribution centers, and stores.

Retailers often have to procure merchandise centrally for a large number of recipients (such as stores) and then distribute the merchandise to these recipients. Retail allocations allow retailers to plan and control relevant quantities, dates, delivery relationships, and delivery phases.

Retail allocations provide a number of possible scenarios for the delivery of merchandise:

  • Directly from the vendor to the recipient
  • From the vendor to a location and then to the recipient
  • From a location to a recipient

Processes for retail allocations can conform to either the push principle or the pull principle as follows:

Push principle:
An overall quantity of a product is distributed to the recipients according to rules, ratios, or strategies.
Pull principle:

Demand originating from the recipients is bundled and procured.

Retail Allocation

Retailers often have to centrally distribute merchandise among a large number of recipients (for example, stores). One example would be fashion merchandise or promotional items. Using allocation tables, you can plan the distribution of this type of merchandise and then trigger the necessary goods movements.

An allocation table is a tool for merchandise distribution used by a head office to plan, control, and monitor supplies to plants (stores, distribution centers). It is used, for example, in initial distribution of materials, distribution of promotional goods, distribution of stocks, and distribution of imported goods procured centrally.

You create an allocation table to split up a specific quantity of merchandise. The allocation table contains all the important information on the how the merchandise is to be distributed, such as the materials to be allocated, the source of supply, the recipients, the quantity each is to receive and the delivery dates.

You also determine the goods movements (for example, direct-store-delivery) at this point. You can have the system propose the plants. To do this, you enter an allocation rule or a plant group. You can include your own allocation strategy. You can change any default data suggested by the system.

Process Flow and Involved Documents

Retail allocations enable the planning and triggering of distribution processes relevant for retail business processes, for example, cross-docking and flow-through. Retail allocations can be created in various ways either automatically or manually, depending on the business process, for example:

Promotion:
In a promotion (business object), products, quantities, and participating stores are planned at a high level; an allocation is created automatically as a follow-on document of the promotion to plan and control the procurement aspect at a more detailed level.
Purchasing contract, purchase order, shipping notification:

The process follows the push principle and starts with a procurement document (sent from the vendor to the distribution center).

Merchandise and Assortment Planning:

A retail allocation is created based on planning data in SAP Merchandise and Assortment Planning.

Markdown optimization:

A retail allocation is created using planned allocation data from a markdown optimization tool.

The allocation table thereby acts as a tool concentrating on push processing. It contains:

  • Materials to be allocated
  • Source of supply
  • Recipients (stores or customers)
  • Quantity to be received
  • Delivery dates (both DC and stores)
  • Processing method (e.g. cross-docking, direct store delivery)

The result of the allocation table is to determine or calculate details of what and how much quantity of merchandise every store should get.

Allocation Tables

The Allocation table can be created using transaction WA01.

The header contains information such as the allocation table number, the organizational levels (purchasing organization and purchasing group) and a header text.

An item is assigned to the allocation table header and contains information such as the item category, material number, planned quantity, allocation rule, allocation strategy, Plant group, and status information.

A Plant group is assigned to an allocation table item. The plant group contains information such as the plant group number, the number of plants in the group, allocation shares and planned quantities. You can use plant groups that were created in the classification system or within a promotion for allocation.

A Plant/customer is assigned to a plant group. You receive plant information for each allocation table item, such as plant number, planned quantity, source of supply and delivery date.

A distribution center is assigned to at least one plant as a delivery plant. For each allocation table item, you have DC information such as the DC number, planned quantity, and external vendor.

Delivery phase for a plant or distribution center: A delivery phase is assigned to a Plant or distribution center. The delivery phase provides you with information such as the delivery date, order date, and delivery quantity.

Allocation Strategies

Allocation strategy: The allocation strategy defines how the system calculates the planned quantities for the recipients. A strategy can process data from SAP Retail, but also data from SAP BW (for example, sales history).

Some allocation strategies are included in the scope of delivery, others can be created. It is possible to use an allocation strategy instead of an allocation rule or manual distribution.

An allocation strategy can be maintained in the Customizing settings for the allocation table type. This strategy is proposed in the allocation table at item level.

The following strategies exist in the standard system:

Equal allocation:
The quantity in the allocation table item is split up equally among all the sites.
Simple replenishment strategy:

Allocation based on a replenishment strategy uses a simplified form of stock level check. The maximum stock level in the article master is compared with the available stock in the site and the planned quantity to be ordered/delivered is calculated from the difference. No planned quantity can be calculated for sites that are not listed. A replenishment strategy can only be used if there is at least one site group at item level. No quantities or allocation rules can be maintained in an allocation table based on a replenishment strategy, as the quantity is calculated automatically by the system.

Replenishment strategy including structured articles:

This strategy functions in the same way as the simple replenishment strategy. It also takes structured articles into account. Where structured articles are split up into their constituent components at goods receipt, the requirement for the header article is determined from consumption figures for the components.

Distribution of the generic article quantity based on quota scales:

The system uses the variant-creating characteristics of a generic article to determine the value and quota scales valid for a generic article item in an allocation table. If quotas have been maintained, the generic article is distributed among the variants and sites in line with the quotas.

Store Material View (Recipient Matrix)

Allocation tables can be created with one or more articles either manually or using the plant groups. They can also be created using an existing purchase order or a shipping notification as reference.

Very often, allocation tables are also used by the Head office to plan the returns of the merchandise from the stores to the warehouse at the end of the season.

Plant groups can be created as master data and then assigned during the creation of the allocation table or can also be entered into the allocation table during its creation.

Recall of the Merchandise

The allocation table functionality also supports the return of merchandise from the stores to the warehouse at the end of season. It can also be used to re-distribute the merchandise to other outlets or other market where the season is still ongoing.

A different allocation table is used for this business scenario.

For the process for allocation recall actions (return) from stores the special allocation strategy (0005) is used, which determines the current stock of certain merchandise in stores. In this case the returns from stores can be centrally advised and the merchandise recalled to the DC, as the system generates from such an allocation table instead of the Stock Transfer Orders (DC to stores) the return transfer orders (from store to DC). Additionally a notification to the stores with an optional confirmation step could be added.

Allocation Functionalities

Additional Functions in Retail Allocation Table in Fashion are:

Soft ATP Check:

An ATP simulation can be triggered in the allocation table so that the available quantity is determined. The user can choose either to adopt it into the allocation table, or cancel it.

Season and segment determination

When generating the follow-on documents from the allocation table: Purchase orders/STO (external, internal) and sales orders consider automatic segmentation determination and season determination.

ATP Soft Check

An ATP simulation can be triggered in the allocation table so that the available quantity is determined.

This simulation is triggered by a new button inside Allocation Table. it is namend Soft ATP check and resides on DC Level. It provides material and quantity and delivery date or delivery phases.

Pop-Up with the available quantity coming back from ATP. The user can choose either to adopt them into allocation table or cancel it and stick to the original planned quantity.

Further explanations about season and segement determination:

Season Determination
While generating the follow-on documents a check will be performed whether the material being distributed to the stored meets the seasonal restrictions if being maintained.
Segment Determination

While generating the follow-on documents a check will be performed whether the Materials being distributed to the Plants will meet the maintained segmentation strategies. The segmentation determination is part of the entire segmentation strategy which will be maintained in customizing.

ATP Check

To Perform the ATP-Check within the allocation table:

  • In order to verify the planned quantities the button „ATP Check" needs to be performed
  • A small pop-up screen will require, whether the proposed quantities (via ATP) or the originally planned quantities will be maintained in the allocation table

The stock transport orders are also enabled for availability checks and the real ATP happens then.

Allocation Table List

The Allocation table list can be displayed using transaction WA31.

Allocation Table List

An allocation table list provides a list of allocation tables according to specific selection criteria. For example, it is possible to specify the elements in the material hierarchy (hierarchy ID and hierarchy nodes), the material group, and the material as selection criteria. It is also possible to select by the relevant plants, vendors, or by vendor orders already generated.

The change or display mode can be accessed for a selected allocation table from the material list. The material master can be accessed directly from the detailed view of the allocation table item(s). Depending on the notification category of the allocation table, it is possible to access the item overview for the allocation table from the list, so as to enter requested and confirmed quantities for each plant.

The Creating Application column indicates how the allocation table was created.

Explanation about the Creating Application

Creating ApplicationExplanation
ASignifies a promotion
BPerishables planning
CMerchandise and assortment planning
DDialog
EDetailed assortment planning

Store Communications in Allocation Tables

Notifications are used to exchange data between the head office and stores and between head office and distribution centers. These contain information about the stock split, including the articles, quantities and delivery dates and other information.

The type of notification (and other types of information associated with this) is determined by the notification category for each allocation table item or for each site within an item. The notification category controls the transfer of individual information. The following are further details:

Allocation Table Notification:
The sites are sent information on the articles to be allocated, the quantities allocated and delivery dates.
Request Notification:

A request notification is a allocation table notification requiring the sites to reply to the head office and confirm the quantities allocated to them or request different quantities. If a request notification is created, you can configure your system so that follow-on documents can only be generated for the allocation table type after the quantities requested by the sites and those confirmed by the head office have been entered in the allocation table.

Confirmation Notification:

A confirmation notification is a reply sent by the head office as an answer to the quantities requested by the sites. It informs the sites about the "final" quantities, as the requested quantities may be changed in the head office.

Allocation Table Notifications for Distribution Centers
Distribution centers are sent information on planned goods receipts. The list they receive contains the total planned quantities of an article for all sites and the planned goods receipt date in the distribution center.

Note

In PUSH scenario: only Allocation Notification is usually triggered.

Follow-on Document Creation from Allocation Tables

The follow-on documents typically created from allocation tables are:

Vendor purchase order
To generate purchase orders placed with external vendors.
Warehouse order

For generating stock transport orders with the distribution center.

Delivery

For generating deliveries from the distribution center to the stores.

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