Planning And Allocation Vs. Replenishment: When Is Each The Best Strategy?

As a full line retailer, you carry many types of products to meet your customers' needs. Everything from fashion softlines to commodity hardlines is available in your stores. These disparate merchandise types have differing traits and present unique challenges to your Merchants and Inventory Analysts. A frequently asked question is: What are the best strategies for addressing forecasting and inventory concerns for various types of product? To begin, let's define what we mean by Replenishment and Planning & Allocation.

What is Planning and Allocation (P&A)? Merchandise Planning is defined as the process of setting and maintaining future performance goals for sales, inventory and other financial metrics and tracking actual results and variances to those goals. Planning decisions are based on historical trends and management insight into expected future changes such as number of stores, calendar shifts, business shifts, and promotional events.

Retail Replenishment can be defined as acquiring product on a recurring basis to support anticipated need. Replenishment is best served as an automated process given the huge number of combinations of items and store locations. Systematic creation and updates to demand forecasts and automatic creation of purchase orders are common functions supported by most leading solutions.