Merchandise/Allocation Planning: Strategically Allocate Your Merchandise

Big Lots uses allocation software to relate inventory to store volume, improve merchandise distribution to its 1,350 stores, and reduce overall inventory.

Big Lots is one of many retailers that have garnered sizeable benefits from allocation software, which uses algorithms to improve supply chain effectiveness.

The company used an aged, proprietary legacy inventory allocation system that lacked functionality to effectively distribute products to its 1,350 stores. The software met Big Lots' needs when it distributed a limited number of items to a fewer number of stores; however, the retailer grew out of the software. Big Lots' SVP of Merchandise Planning/Allocation and CIO, Lisa Bachmann, had exhausted her efforts to enhance Big Lots' existing system. "The allocation software was a piece in a large supply chain project," says Bachmann. "We had initiatives in planning, allocation, and merchandising that included process changes as well as software deployments and integration." So, Big Lots developed new allocation processes prior to searching for software that met its requirements. After defining the business need, it sent out RFPs to select allocation software vendors.