Analyze and achieve the most profitable inventory level
4R’s Seasonal Allocation Solution brings advanced analytics to an age-old retail challenge—to never be out of stock on the products customers demand while ensuring you don’t overstock.
Our 4 R’s can transform seasonal allocation from the greatest risk into the greatest profit. The Right Product, in the Right Place, at the Right Time, Drives the Right Profit!
Our methodology leverages machine learning and blends different forecasting components based on point in season. The result is a demand forecast that combines the best thinking from your planners with the ability to adapt to changing conditions.
Our allocations are designed to maximize profitability
4R’s Allocation solution uses our unique profit-optimal methodology to place each unit, casepack, or prepack of an item in the location where it is most likely to be sold, maximizing full price sales and minimizing stranded inventory.
Our Web UI alerts planners when forecasts are not tracking to seasonal demand patterns, and provides the means to make adjustments. That means fewer markdowns caused by overstocks.
4R’s unique Software-as-a-Service “Plus” delivery model provides dedicated customer service experts as well as cloud-based software. You don’t have to purchase hardware or software, or get training; all you do is set up data exchanges. Our team performs Quality Assurance on our deliverables and consults with you on a weekly basis. They act as an extension to your team, ensuring you are getting the most out of our solution.
Allocating seasonal items to stores is a challenging problem. Because you are introducing a whole new set of products every season, it’s difficult to predict how well and when they will sell. Not only that, but your season is too short to do another buy after selling begins, so you must make the most of the units you have – put them in the wrong place, and you will have lost sales in some locations and stranded inventory in others.
Without good tools, you are faced with a choice: push out more inventory at the start to capture early demand, or push less and wait until you can read early sales, to avoid stranded units.
Retailers sometimes refer to this conundrum as “Rush and be wrong, or wait and be late.”
At 4R, we have developed an approach to allocation that avoids this quandary, by combining a web UI that enables effective collaboration with planners, sophisticated “read and react” forecasting, and a unique optimization algorithm that finds the right timing and location for each unit of a product.
Together, these elements reduce lost sales, minimize the need for markdowns to reduce stranded inventory, and maximize sales revenue.
Our Seasonal Allocation Solution removes guesswork and reduces risk from your buy. The rich user-interface is intuitive, so getting from A to Z is a breeze
Read-And-React Forecasting Allows You to Pivot
We use a proprietary forecasting methodology that adapts to changing conditions over the course of the season. That allows us to accurately predict how much is going to sell, and when, by making the best use of the most relevant information at any given point in time.
Collaboration with Planners Is Key
Accurate seasonality profiles are critical to achieving good forecasts for each of the remaining weeks of the season. We use Machine Learning techniques to produce profiles and make initial assignments. We then leverage the knowledge of planners to spot exceptions and make adjustments. Once the season begins, the system identifies SKUs that are not tracking to their current profile assignment, alerts planners, and provides a flexible, easy-to-use web UI to make changes.
Markdowns Are a Fact of Life
No matter how good your allocations are, you will inevitably have to mark down some items in order to stimulate demand. As part of solution setup, we estimate the price elasticity of your products. Then, when those markdown decisions are fed to 4R during the season, we calculate the lift in demand you will get at the new price point, and adjust our forecasts and allocations accordingly.
Advanced Optimization Maximizes Profitability
A good forecast is a necessary piece of the allocation puzzle. Figuring out what to do with that forecast is what our advanced optimization solution is all about. The decision that must be made is how many units of inventory to allocate to any given store at any given time, and the answer is based on the marginal probability of selling each additional unit during the next coverage period versus the risk of not selling it before the end of the season.
Our Seasonal Allocation solution determines the profitability of sending the next unit of a SKU to each possible location, taking into account the number of units already being held there, and then chooses the location with the highest score.
The allocation process for this cycle is done when no more locations will benefit from an additional unit right now, with remaining units in the DC held back for allocation in future weeks. We also provide a flexible set of business rules for the end-of-season push from your distribution centers.
The Results Speak for Themselves
By allocating inventory more frequently, in smaller increments, and with greater precision, our clients have seen sales increases of 2% to 4% and significant reductions in stranded inventory using the 4R solution.
The Retailer’s Dilemma…
Rush and be Wrong or Wait and Be Late!