DemandTec

Promotion Inventory Allocation

Extend Promotion Planning to Store-level Inventory to Reduce Stockouts and Overstocks

• Leverage industry-leading optimization science to create more accurate promotion forecasts
• Create allocation and replenishment plans that reduce stockouts and overstocks
• Monitor promotions in-flight to maintain optimal inventory levels throughout the promotion

Billions of dollars are wasted in trade promotions every year when retailers’ supply chains aren’t synchronized with their promotion calendars at the point of impact – the store shelf. Unfortunately, while retailers’ supply chain systems support ongoing store replenishment, most are very limited in their ability to forecast promotion demand. One study conducted by the Grocery Manufacturers Association (GMA) showed that out-of-stock rates jumped from 7% to over 13% during promotions. Demand for individual items varies widely among stores, and this variation becomes even greater when items are promoted. As a result, many retailers suffer from frequent stockout and overstock instances that lead to underperforming promotions, lost sales, frustrated shoppers, and decreased loyalty.

Promotion Inventory Allocation improves trade promotion performance by extending the promotion planning and forecasting process to store-level inventory management in order to ensure adequate inventory levels for planned promotions. This analytical service, powered by technology from DemandTec partner Market6, provides a more accurate promotion forecast, estimates an initial promotion shipment and any replenishment orders to maintain secondary displays, and monitors daily promotion volume against expected store volume during the promotion to enable retailers to decrease stockouts and overstocks and increase sales.

Leverage Industry-Leading Optimization Science to Create More Accurate Promotion Forecasts

Promotion Inventory Allocation leverages promotion forecasts created using the industryleading optimization science of the DemandTec Platform™. The platform’s item/ store-level modeling and optimization captures the elasticity of each item, as well as cannibalization, halo effects, cross-category pull through effects, trends, seasonality, and a host of other causals to deliver an unparalleled level of accuracy. Promotion Inventory Allocation then uses this forecast to initiate and calibrate item/store/day-level forecasts used to create allocation and replenishment plans.

Create Allocation and Replenishment Plans that Reduce Stockouts and Overstocks

Promotion Inventory Allocation creates allocation and replenishment plans using proprietary algorithms that incorporate item movement in each individual store. The analytical service also enables merchants to set tolerance thresholds for overstock or stockout situations for each promoted item. These allocation and replenishment plans are updated daily prior to the launch of the promotion based on individual store input, revisions to the promotion plans made at headquarters, and the previous day’s data. These plans can also incorporate the best available information on shipments, POS movement, shrink, and inventory updates.

Monitor Promotions In-flight to Maintain Optimal Inventory Levels Throughout the Promotion

Promotion Inventory Allocation enables retailers to make midstream course corrections to avoid costly overstocks while avoiding out-of-stock conditions. By monitoring the daily volume for each promoted item against forecast targets, the analytical service can identify anomalies, such as higher than predicted inventory levels that might result from a display that wasn’t built, and can suggested lower subsequent replenishment orders in order to re-optimize inventory levels. During the promotion, the analytical service can also identify stores that are underperforming and send alerts to in-store resources assigned to promotion execution.

Get Started Today

Are you ready to improve the performance of your promotions? Take the next step. For more information, call 1-888-676-3626 or request information online.